The week ahead starts with China releasing third quarter GDP numbers and ends with flash PMI data providing insights into how the world's largest economies started the fourth quarter. Whether the week also sees another US presidential debate between Trump and Biden remains uncertain. Flash PMI surveys are updated for the US, Eurozone, UK, Japan and Australia, and will reveal how these economies - representing around half of global GDP - will have started the fourth quarter.
Caixin PMI data indicated a strong end to the third quarter for the Chinese economy, with business activity maintaining a solid pace of expansion during September. The recovery was sustained by robust inflows of new business, with a jump in goods export growth in particular providing a welcome boost. Rising demand helped to generate further jobs growth as capacity pressures rose steadily. Business sentiment about the year-ahead outlook remained upbeat, boding well for mainland China as the economy heads into the fourth quarter.
IHS Markit's PMI surveys indicated a sustained expansion of the global economy in September, though trends varied by sector. Output rose in 18 of the 25 manufacturing and service sub-sectors covered by the PMIs during September, led by auto makers. Of the seven deteriorating sectors, tourism and recreation firms remained in the deepest downturn amid ongoing COVID-19’s containment precautions.
Particularly encouraging was a further improvement in demand for machinery and equipment and construction materials, hinting at rising investment spending.
The recent EUR Price Alignment Interest (PAI) and discounting switch from EONIA to €STR for cleared derivatives is now in the books. From 27 July 2020, any EUR cleared swap or EUR swaption delivering a cleared swap follows the conventions set by the clearing houses (e.g. CME, Eurex, LCH) and €STR is now the standard rate for discounting those instruments. The new EUR PAI and discounting conventions delivered €STR discounting risk to all parties involved in cleared derivatives.
While concerns of a COVID-19 resurgence and the potential for another round of shutdowns cast shadows on the global economic recovery, investors remained optimistic for equities, contributing to outperformance of higher risk names captured by 60-Month Beta and 24-Month Value at Risk across each of our coverage universes. Investors put their hopes on vaccine developments and a continuation of the US Federal Reserve's low rate policy as it shifts to average inflation targeting.
When responding to regulatory change, market complexity or the digitisation of fundraising, both managers and their investors are faced with growing data requirements. IHS Markit's Elina Gokh and Jocelyn Lewis sat down with Private Debt Investor to discuss how growing market complexity is forcing managers to re-evaluate the way they run their businesses - with potentially transformative effects for the credit industry. In the article, Elina and Jocelyn address 5 key questions. Download now.
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