China data helps ease concerns - MUFG

Derek Halpenny, European Head of GMR at MUFG, notes that the Governor Brainard in her speech mentioned global risks as a factor for remaining patient but the data from China today suggests those risks continue to recede.

Key Quotes

“Industrial production, retail sales and fixed asset investment were all stronger than expected and point to the potential for real GDP to have at least remained stable in Q3 at the 6.7% growth rate recorded in Q1 and Q2. Our colleagues in Hong Kong are most impressed with the retail sales outcome with the annual growth rate accelerating from 10.2% to 10.6% in August. These spending growth figures suggest jobs and incomes continue to grow.

The continued positive flow of data from China is another factor arguing for the Fed to stop procrastinating and take action that might actually help send a positive message to investors, corporates and households in the US that the economy is resilient and strengthening. Stable growth in China points to continued stability in the Asian region and continued positive sentiment in EM more generally.”