Guide to the Markets - J.P. Morgan Asset Management

Guide to the Markets

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We are pleased to present 4Q18 Guide to the Markets. The Guide contains analysis of economic and market data through September 30, 2018, which presents a wide range of macroeconomic data which can help short-term fixed income investors assess market risks and position portfolios in the coming quarter. Highlights include:

  • China’s economic growth remained mixed; second quarter’s gross domestic product (GDP) declined further as robust exports failed to offset slower domestic data. Despite lower interest rates funding pressures remained tight, impacting key sectors including property and infrastructure, the People's Bank of China kept key borrowing, lending rates and reserve requirement ratios unchanged during the quarter. Open market operations rates were also unchanged, although the central bank did increase the size of its medium-term lending facility to help ensure accommodative liquidity conditions. Market-driven interest rates trended down during the quarter, before stabilizing; meanwhile the Chinese yuan remained one of the weakest performing Asian currencies versus the U.S. dollar.
  • In Australia, economic data remained robust with second quarter GDP hitting a six-year high, supported by strong exports and consumption. However, housing data continued to moderate with prices and volumes declining further. The Reserve Bank of Australia left rates unchanged at 1.50% during the quarter, further extending the already record period without a central bank rate movement. Bank Bill Swap Rate yields trended down while the curve steepened, meanwhile the Australian dollar was one of the worst performing major currencies.
  • Singapore’s economic data remained solid with robust exports, services and retail sales supporting positive second quarter GDP growth. Singapore Swap Offer Rates (SOR) increased while the curve flattened, U.S. Libor rates also increased, but by a greater magnitude, pushing the SOR/Libor spread wider. Meanwhile, Singapore Interbank Offered Rates were broadly unchanged. The Singaporean dollar depreciated versus the U.S. dollar, but remained one of the best performing Asian currencies during the period. In line with the Monetary Authority of Singapore’s policy, the Singaporean dollar nominal effective exchange rate trended upwards and remained in the upper part of its trading range.

As you consider these important topics, your Global Liquidity Client Advisor will be happy to share our market views and tailor liquidity solutions to best meet your needs.