Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
US equity markets closed higher today and capped off the best
weekly performance since early-July, while APAC and European
markets closed mixed. Most benchmark European government bonds
closed higher, and US bonds were close to flat on the day. iTraxx
and CDX indices closed tighter across IG and high yield, with
CDX-NAHY tightening significantly on the week. The US dollar and
oil closed lower, while gold and silver were higher. It's worth
noting that the forecasts for orange production in both Florida and
Brazil is beginning to look particularly dire as flu season
approaches alongside increasing numbers of COVID-19 cases.
Americas
US equity markets closed higher today; Nasdaq +1.4%, S&P
500 +0.9%, and DJIA/Russell 2000 +0.6%. The S&P 500 closed
+3.8% week-over-week, which is its largest weekly gain since
early-July.
10yr US govt bonds closed flat/0.78% yield and 30yr bonds
-1bp/1.56% yield.
CDX-NAIG closed -2bps/53bps and CDX-NAHY closed -11bps/362bps,
which is -7bps and -42bps, respectively, week-over-week.
DXY US dollar index closed -0.6%/93.03.
Gold closed +1.6%/$1,926 per ounce and silver +5.2%/$25.11 per
ounce.
Crude oil closed -1.4%/$40.60 per barrel.
The below chart shows the daily number of corporate bond
constituents in the IHS Markit iBoxx USD Investment Grade Index
that were quoted in sizes ≥$1 million by 10 or more dealers versus
the CDX-NAIG closing spread. The chart highlights the sharp drop
off in quote depth in mid-March, but also indicates that liquidity
improved significantly in late-September to levels last seen in
late-February.
Revenue per available room at US hotels last week was 48.1%
below the year-ago level, according to STR. This is close to most
readings dating back to early August, reinforcing the notion that
travel-related spending has been slow to recover. (IHS Markit
Economists Ben Herzon and Joel Prakken)
The 2020-21 Florida all orange forecast released today by the
USDA Agricultural Statistics Board is 57.0 million boxes, down 15%
from last season's final production and worse even than the Steger
forecast of 61 million boxes. The non-Valencia forecast of 23.0
million boxes is 22% less than last season's production. The
estimated number of bearing trees (without Navels) is 19.1 million,
down 25from the previous season. The estimated fruit per tree for
early-midseason oranges is 590, a decrease of 24% from last season,
and the lowest in a series dating back to the 1964-65 season. The
Valencia forecast of 34.0 million boxes is 10% lower than last
season's production. The estimated number of bearing trees is 30.2
million, up 2% from the previous season. The estimated fruit per
tree is 441, a decrease of 18% from last season and the lowest
since the 2006-07 season. Projected fruit size is below average,
requiring an estimated 243 pieces of fruit per box. Droppage rate
for both early/midseasons and Valencias is 27%, above average. The
Navel forecast of 700,000 boxes is 13% less than last season's
production. The estimated number of bearing trees is 902,000, down
2% from the previous season. The estimated fruit per tree is 194, a
decrease of 18% from last season. (IHS Markit Food and Agricultural
Commodities' Neil Murray)
CPChem says it is now taking steps to increase circular
polyethylene (PE) production by working with proven suppliers of
pyrolysis oil, a feedstock made from waste plastic. CPChem is also
pursuing certification of its circular PE through the International
Sustainability and Carbon Certification Plus (ISCC Plus) approach,
which employs a mass-balance methodology. "We are exceptionally
proud to be the first company to announce production of a circular
polyethylene on this scale in the US," says Jim Becker, vice
president/polymers and sustainability. Upon certification, CPChem
intends to market its new circular polyethylene products under the
trade name Marlex Anew Circular Polyethylene. CPChem says it has
been exploring the technical viability of producing circular
polymers from waste plastic for two years. (IHS Markit Chemical
Advisory's Clay Boswell)
Torc Robotics has announced that it plans to start testing its
Level 4 self-driving technology in the US Southwest in early 2021,
using a second generation of the Freightlner Cascadia prototype
that Torc has been using with Freightliner parent Daimler.
According to Torc's statement, the new-generation Cascadia
prototype bolsters Torc's capability to develop and test the Level
4 self-driving technology. Torc says the test trucks are known
within the company as 'Gen 2'. The partners say the ultimate goal
is to reinvent the truck by co-developing a Level 4 Freightliner
Cascadia with safety-critical redundancy components and seamless
integration of additional computations and hardware to support the
self-driving technology. Michael Fleming, Torc CEO, said, "To meet
the redundancy and performance requirements of a self-driving
truck, the traditional truck chassis must be reinvented. Just like
any major innovation, it requires a stair-step approach toward the
final product. We are taking this one step at a time, with safety
as our guiding principle… We knew from the outset that self-driving
technology cannot be commercialized without an OEM. In trucking,
there are only a handful of OEMs and we were fortunate to join the
industry leader." The companies say that market-ready self-driving
trucks must emulate the actions of the most experienced truck
drivers, including the way an experienced driver is able to 'feel'
component failures. Fleming said, "Our software engineers are
working with highly skilled truck drivers to understand this
experience and transition this human intuition into embedded
sensors and algorithms." The two companies also state that they
expect to develop multiple iterative test truck models before they
release a commercial version, so the Gen 2 will not be the final
truck configuration. Among the updates this second iteration has,
Torc states, is a design to bolster the testing effort and
accelerate data collection to assist in machine learning and
algorithmic development. (IHS Markit AutoIntelligence's Stephanie
Brinley)
Waymo has announced that it is beginning to open its fully
autonomous ride-hailing service to the public in Phoenix, Arizona
(United States). Last year, the company's driverless service, Waymo
One, was limited to selected customers, known as "early riders",
who signed non-disclosure agreements. The company initially plans
to offer fully driverless trips to Waymo One customers only, who
can now bring their friends and family along for the ride, reports
Reuters. Over the next several weeks, residents can hail a ride in
the service's minivans with no human attendant on board within a
50-square-mile area of the city by downloading the Waymo One app.
John Krafcik, CEO of Waymo, said, "Members of the public service
can now take friends and family along on their rides and share
their experience with the world. We'll start with those who are
already a part of Waymo One and, over the next several weeks,
welcome more people directly into the service through our app."
(IHS Markit Automotive Mobility's Surabhi Rajpal)
BorgWarner yesterday (8 October) provided further details of
its acquisition of Delphi Technologies, announced on 2 October,
purchased through an all-stock transaction of USD1.5 billion, with
the new company reportedly valued at USD3.3 billion. Following the
acquisition, BorgWarner is targeting USD175 million of cost
synergies, up from USD125 million planned when the deal was
originally announced. The new BorgWarner has a stronger position in
propulsion systems, as Delphi has brought complementary expertise
and products to the company's portfolio. Delphi has also brought an
established customer base. With the acquisition, BorgWarner now
expects to see increased cost synergies, mostly in the SG&A
expenses category, which should free up capital for continued
development of its propulsion systems in the longer term. The new,
larger BorgWarner will also need to fund more technology and other
research and development to support the new, complementary systems
in the larger portfolio. There is also the opportunity for
increased revenue from the larger portfolio, as well as to improve
the company's ability to provide more comprehensive propulsion
systems. (IHS Markit AutoIntelligence's Stephanie Brinley)
Even though the IHS Markit September net employment forecast
for Canada was above consensus, the 378,200 net employment gain and
the 1.2-percentage-point reduction in the jobless rate to 9.0% beat
market expectations. (IHS Markit Economist Arlene Kish)
The large upswing in fulltime positions at 334,000 was the
biggest since June, and part-time workers advanced 44,200.
Self-employment fell again, marking the seventh monthly loss so far
this year.
The net employment gains in both the overall goods-producing
and services-producing industries were stronger in September.
The labor force participation rate edged up to 65%, coming in
just 0.5 percentage point shy of February's pre-pandemic
level.
Labor market conditions are proving to be solid, but the onset
of the second wave and changing demand conditions can alter the
recovery path.
Canada's job recovery is proving to be more resilient than
expected as employment is about 720,000 positions below February
levels and the unemployment rate is down 4.7 percentage points from
May's 13.7% peak.
There are several industries, like utilities; professional,
scientific, and technical services; and education, where employment
has returned to pre-pandemic levels.
There are a few other industries that will soon join the recovery,
like finance, insurance and real estate, manufacturing, public
administration, and health care and social assistance. The main
laggard is accommodation and food services.
For total hours worked, educational services is the only
industry that is exceeding February's level given the extensive
adjustments within the industry to accommodate changing in-person
and on-line learning.
As such, the catch-up in hours worked will be longer. Plus, the
moderate improvement in the youth unemployment rate below 20%
ground the overall jobless rate lower.
Canada's federal and Ontario provincial governments have
announced that each will contribute CAD295 million (USD222 million)
to Ford's CAD1.8-billion planned investment in its Oakville
assembly plant, Ontario, to support production of battery electric
vehicles (EVs) beginning in 2024. The combined funding of CAD590
million, according to a joint statement from the Canadian federal
and Ontario governments, is part of the total USD1.8-billion
investment, not in addition to Ford's investment. The governments'
statement says that the investment will help to secure 5,400 jobs
across Ford's production workforce in Canada and grow Canada's
green economy. The statement also says, "Electrification will allow
us to position the innovative Canadian automotive industry as a
global leader in BEV manufacturing." Dean Stoneley, president and
CEO of Ford Motor Company Canada, is reported as saying, "With this
investment, Ford will expand its award-winning portfolio to include
a family of battery-electric SUVs built at Oakville Assembly,
marking the first time ever that a full-line automaker has produced
full BEVs in Canada for the North American market." An Automotive
News Canada report quotes Stoneley as saying that the governments'
participation was important in Ford's decision to invest in EV
production in Ontario, specifically saying, "This is a vital step
toward Ford's larger multibillion dollar investment in producing
electric vehicles for consumers around the world." Ford's
commitment to convert the Oakville plant to EV production was
revealed last month during the negotiations on a new labor contract
with the union representing Ford workers in Canada, Unifor. Unifor
has since moved on to negotiations with Fiat Chrysler Automobiles,
and the union is also looking for a product investment commitment
from FCA. (IHS Markit AutoIntelligence Stephanie Brinley)
According to the Central Bank of Costa Rica (Banco Central de
Costa Rica: BCCR), Costa Rican GDP contracted by 8.6% year on year
(y/y) in the second quarter, driven by declines in all major
sectors of the economy. Based on this contraction, as well as our
expectation that recovery will be slow given the results of more
recent high-frequency indicators, we are revising down our 2020 GDP
forecast this month. (IHS Markit Economist Lindsay Jagla)
Recently published data by the BCCR show that GDP declined 8.6%
y/y in the second quarter. In quarterly terms, GDP contracted by
10.8% quarter on quarter (q/q) during the quarter following a 1.4%
q/q contraction in the first quarter.
Measures to combat the spread of the coronavirus disease 2019
(COVID-19) virus domestically, including curfews and mobility
restrictions, have had a significant impact on Costa Rica's
internal demand and domestic consumption. The closure of borders
and restrictions on tourism have exacerbated these effects,
resulting in an overall 11.7% q/q drop in private consumption and a
16.7% q/q decline in imports during the second quarter.
Global lockdowns in response to the COVID-19 virus pandemic
have played a significant role as major trading partners,
especially the United States, have also experienced significant
economic contractions, resulting in a 27.6% q/q decrease in exports
during the second quarter.
Government efforts to stimulate the economy and boost activity
included a package that provided loans to micro, small, and
medium-sized businesses, bonuses for those who lost their jobs, and
a moratorium on certain taxes. Overall, government spending
increased 6.0% q/q in the second quarter.
Nearly all economic sectors declined in the second quarter
compared with the first, with the largest quarterly contractions
stemming from accommodation and food services (-62.0%),
transportation and storage (-32.1%), manufacturing (-20.4%), and
wholesale and retail sales (-15.6%), in line with expectations
following the enactment of various COVID-19 virus-related isolation
measures that restricted operations and lowered demand for many
services. Only two sectors grew in the second quarter: construction
(+9.0%) and teaching, health, and social services (+0.6%).
Europe/Middle East/Africa
Most European equity markets closed higher except for Spain
-0.6%; France/UK +0.7% and Italy/Germany +0.1%.
Most 10yr European govt bonds closed higher; Spain/Italy -4bps,
UK/France -1bp, and Germany flat.
iTraxx-Europe closed -1bp/52bps and iTraxx-Xover -4bps/316bps,
which is -6bps and -25bp, respectively, week-over-week.
Brent crude closed -1.1%/$42.85 per barrel.
August's limited GDP gains confirm our long-held assessment
that the United Kingdom was never on course for a strong 'V-shaped'
recovery. In addition, the outlook is increasingly challenging,
with the latest developments suggesting that the economy has been
less assured from September. (IHS Markit Economist Raj Badiani)
The UK economy rose for the fourth successive month in August
following a record fall of 19.5% month on month (m/m) in
April.
The UK's Office for National Statistics (ONS) reports that the
economy grew by 2.1% m/m in August, preceded by m/m gains of 9.1%
in June and 6.4% in July. Nevertheless, it remains 9.2% below the
February level, which represents the point before the full impact
of the COVID-19 virus pandemic.
This was broadly in line with our expectations, but the August
outcome was short of the 4.6% consensus forecast of economists
polled by Reuters.
The economy grew by 8.0% in the three months to August compared
with the three months to May. It had been negative with the
comparable three-month growth rates, standing at -19.8% in June and
-6.8% in July.
Nevertheless, the GDP gains in July and August still point to a
record gain in the third quarter, probably by around 14.5% quarter
on quarter (q/q), spelling the end of the recession in the first
half of this year.
Meanwhile, in annual terms, the economy in August was 11.7%
smaller compared with a year earlier.
A breakdown by output reveals that services increased by 2.4%
m/m in August after a 5.9% m/m gain in July, but they were still
9.6% lower than February's level.
The accommodation and food services sectors provided the
largest contribution to rising service activity during August.
Specifically, accommodation and food services rose by 69.7% m/m in
August, thanks to the continued easing of lockdown measures and the
government's 'Eat Out to Help Out' scheme, which provided a 50%
discount on food or non-alcoholic drinks to eat or drink in (up to
a maximum of GBP10 discount per diner). The accommodation industry
also grew by 76% between July and August, with restricted
international travel encouraging domestic households to travel in
the UK.
The hospitality and accommodation sectors contributed 1.25
percentage points to the 2.1% growth in total GDP during August.
Meanwhile, many other parts of the services sector recorded muted
growth.
Tesla CEO Elon Musk has reportedly said that the company's next
new plant, under construction in Germany, will use the new battery
technology and manufacturing recently announced. Automotive News
says that the executive added that this plan could result in a
"significant production risk". Along with the Model Y to be built
in Germany, Tesla is reportedly considering building battery cells
at a nearby site. Automotive News reports that Musk said it will
take about two years for the factories in Fremont, California
(United States) and Shanghai (China) to shift to the new batteries.
It would make sense to build the new plant to accommodate the new
batteries, and Tesla has reportedly revived plans for battery
production at the German facility. (IHS Markit AutoIntelligence's
Stephanie Brinley)
French industrial production rose by 1.3% month on month (m/m)
in August. This follows rises of 12.7% m/m in June and 3.8% m/m in
July. August's figures still point to a large rebound in production
during the third quarter, but the 'carry over' for the fourth
quarter of 2020 will be modest. (IHS Markit Economist Diego Iscaro)
Industrial output had collapsed by 34.1% between February and
April, and output in August was still 6.3% below its pre-COVID-19
virus level.
Manufacturing production rose at a slightly weaker pace of 1.0%
m/m in August, following an increase of 4.5% m/m in July.
Manufacturing output was still 7.4% below its pre-COVID-19 virus
level in February.
The breakdown by product shows production of transport
equipment being the main driver of the m/m growth rate in August,
rising by 5.9% m/m (see chart). However, production of transport
equipment remained around 18% below its pre-pandemic level,
representing the most sluggish recovery among all production
sectors.
Meanwhile, production of goods classified as 'Other' also rose
by a solid 2.4% m/m in August, boosted by higher production of
basic metals and rubber and plastic products. On the other hand,
production of food and beverages (-2.0% m/m), coke and petroleum
(-6.9% m/m), and machinery and equipment (-4.0% m/m) all declined
in August.
August's figures suggest that, although industrial production
will rebound strongly during the third quarter, the 'carry over'
for the fourth quarter of 2020 is likely to be muted. With
increasing number of COVID-19 cases triggering new containment
measures in France and other European countries, the risk of
production being weaker than expected during the final months of
2020 is considerable.
The Eolmed Floating Wind Farm pilot project is off to a good
start as Total announced that it has taken up a 20% stake in
France's first offshore wind farm located in the Mediterranean Sea.
The 30 MW wind farm, developed by majority shareholder Qair
(formerly known as Quadran Énergies Marines) is located
approximately 18 km off the coast of Gruissan, and near
Port-La-Nouvelle in the Occitanie Region. Just four days ago, Qair
awarded the supply of three V164-10.0 MW wind turbines to MHI
Vestas. The turbines will be installed on foundations provided by
Ideol, a pure-play floating foundations company, which has a
patented Damping Pool foundation. This is MHI Vestas' third
floating offshore wind project in France and its sixth project
globally. (IHS Markit Upstream Costs and Technology's Melvin
Leong)
Dutch consumer prices increased by 1.1% year on year (y/y) and
dropped by 0.2% month on month (m/m) in September, according to the
national consumer price index (CPI) measure, and grew by 1.0% y/y
and fell by 0.4% m/m according to the EU-harmonised measure. This
is after the sharpest monthly fall in headline inflation in 11
years. (IHS Markit Economist Daniel Kral)
A large positive contribution to September's headline inflation
came from clothing and footwear, which increased by 11.1% m/m. This
is because summer sales in 2020 lasted well into August, unlike in
2019, while autumn collections were introduced in September.
The largest downward pressure came from restaurants and hotels,
which dropped by 4.4% m/m, and transport, down by 2.5% m/m. On an
annual basis, the largest increases were in alcohol and tobacco,
due to tax increases earlier in 2020, and miscellaneous goods and
services.
Statistics Netherlands (Centraal Bureau voor de Statistiek:
CBS) notes that prices covering roughly 3% of the consumption
basket, such as airlines or events, had to be estimated, due to an
insufficient number of recorded transactions.
Core inflation went up to 1.7% y/y in September from 0.8% y/y
in August, even as core inflation in the eurozone dipped to a
record low of 0.2% y/y. This means that the Dutch differential
versus the eurozone widened significantly again
The increase in the unemployment rate has so far been very
limited, from 2.9% in March to 4.6% in August. This reflects the
success of the government's stimulus measures to sustain
employment, despite the record contraction in first-half 2020
GDP.
A new "blacklist" of the most contaminated foods that were
discovered on sale in Italy has been unveiled by Italy's farmers'
group Coldiretti on 1 October. The group said it developed its list
based on reports published by EFSA and Italy's ministry of health.
The Italian group warned that chili peppers originating from the
Dominican Republic and India, which have a 20% rate of
non-conformity, were the least safe food products on Italian
tables. The organization attributed this grouping to the presence
of pesticides such as dicofol, acephate, permethrin, chlorfenapyr
and methamidophos in the chili peppers. The second place in the
danger ranking was awarded to goji berries imported from China,
which reportedly contained carbofuran in 13% of tested samples,
followed by third-ranked Pakistani rice that had an irregularity
rate of 12.5% due to the detection of acetamiprid and tricyclazole
in tested samples. "These are all products that arrived in Italy
with high levels of irregularities because they have been
contaminated by the presence of insecticides, many of which are
banned by Italian use by national and European legislation, as is
the case for dicofol, acephate, permethrin, chlorfenapyr,
methamidophos that were found in chili peppers, tricyclazole in
rice from Pakistan, isoprothiolane in exotic dragon fruit and
fenpropimorph, procymidone, propoxur and methamidophos in Brazilian
dried beans," according to a Coldiretti release. More than 9% of
samples of Turkish pomegranate have been found to be irregular
because they contained a variety of pesticides, including
prochloraz, acetamiprid, cypermethrin and boscalid, said
Coldiretti. The group stated that its focus on imported goods is
warrantied and necessary as the results of the sample tests show
that food products imported into Italy contain an average of 1.9%
of irregularities, which is a level that is "three times more
dangerous than the comparable one for products of national origin,
as only 0.6% of such samples did not comply with the legal
thresholds for pesticides". Coldiretti is devotes special attention
to risk from products of non-EU origin for which the percentage of
irregularities, according to EFSA, rises to 5.8%, "which is an
eight times higher level than was detected for Made in Italy
products". (IHS Markit Food and Agricultural Policy's Jaroslaw
Adamowski)
The Danish passenger car market improved during September,
according to the latest data published by the Danish Car Importers'
Association (De Danske Bilimportører). Registrations increased by
7.6% year on year (y/y) to 17,197 units during the month. (IHS
Markit AutoIntelligence's Ian Fletcher)
The results for traditional types of passenger cars -
hatchbacks, sedans, and station wagons (estates) - were flat or
weak, with the exception of the B sub-compact category, which
posted an increase of 9.9% y/y to 4,067 units. However, the
standalone sport utility vehicle (SUV) category increased 29.8% y/y
to 5,650 units.
When the SUV category is broken down by segment, this growth is
centered on the sub-compact B segment and compact C segment, the
former up 49.7% y/y to 2,364 units and the latter up 28.0% y/y to
2,205 units.
The gain recorded in September means that registrations in the
year to date (YTD) are now down 18.1% y/y at 142,165 units,
compounded by the COVID-19 virus-related declines earlier in the
year.
As for the commercial vehicle categories, the trade association
has reported that light commercial vehicle (LCV) registrations grew
20.6% y/y in September to 2,971 units, although YTD sales in this
category stand at 21,674 units, down 11.8% y/y.
Danish registrations of medium and heavy commercial vehicles
(MHCVs) slipped by 0.8% y/y to 365 units in September and are now
down 28.6% y/y at 2,807 units in the YTD.
Scania has announced that it is working with partners on using
trailers with solar panels installed to increase fuel efficiency.
According to a statement, a plug-in hybrid Scania truck is being
combined with an 18-metre-long trailer clad with solar panels with
a total area along the roof and sides of 140 square meters. The
project is partly funded by Sweden's Vinnova innovation agency,
while Scania is also working with solar panel manufacturer
Midsummer, Uppsala University, energy company Dalakraft, and
Swedish hauler Ernst Express, which is operating the vehicle on
daily assignments. Scania is already researching a large number of
options in an effort to reduce the emissions of its vehicles. In
this instance, it will take advantage of the vast real estate on
the side and roof of box trailers, which is typically used for
little other than marketing for the company that runs them. After
initial tests, the company is already reportedly seeing benefits,
with fuel savings from this configuration of between 5% and 10% in
Sweden, where the panels are expected to generate 14,000 kWh of
energy annually. However, there is even greater potential in more
sun-rich markets, with the company suggesting that the figure could
be double that in southern Spain. (IHS Markit AutoIntelligence's
Ian Fletcher)
Einride, the Sweden-based transportation company, has launched
a new range of autonomous electric transport (AET) vehicles. They
are the next generation of company's electric and autonomous
vehicles, known as Einride pods, that can be remotely controlled by
drivers and do not have a cabin. The AET vehicles come in four
different variations, AET 1 to AET 4, and each model has a unique
design. The company claims that these vehicles are capable of SAE
Level 4 autonomous operation, and would help businesses to reduce
transport costs by up to 60% and CO2 emissions by 90%. Einride's
smaller pods - the AET 1 and AET 2 - are suitable for fenced
facilities as they have low top speeds of 30 km/h. The AET 3 and
AET 4 have top speeds of 45 km/h and are well suited to
long-distance highways and use in large distribution centers.
Robert Falck, founder of Einride, said, "We can already see a
strong traction from the market to start using autonomous and
electric transport. The benefits are clear and we want to be the
player in the market that can help our customers to make the
transition to a better future of transport happen". Einride focuses
on designing and building technologies for freight mobility. The
company recently raised USD10 million in funding, bringing
Einride's total capital to USD42 million. (IHS Markit Automotive
Mobility's Surabhi Rajpal)
Niger has reached an agreement with the International Monetary
Fund (IMF) on the sixth review of its Extended Credit Facility
(ECF). Niger showed mixed results in the sixth and final review
under the IMF's ECF, which was initially approved in 2017. (IHS
Markit Economist Thea Fourie)
An IMF mission team and the Nigerien authorities reached a
staff-level agreement on the completion and review of the sixth and
final review of the IMF's ECF support program. Niger's ECF was
approved on 23 January 2017.
Progress under the ECF has been mixed, with progress made in
clearing the remaining domestic payment arrears and allowing for
prudent acquisition of external debt, while 2019 fiscal spending
overruns and the improvement in the mobilization of domestic
government revenue lag program objectives.
The IMF expects Niger's GDP to grow by 1% in 2020, supported by
COVID-19-pandemic-related food assistance and credit support to the
private sector. GDP growth is expected to increase to 6.9% in 2021,
while the commencement of oil exports expected in 2022 could leave
growth at 9% over the medium term.
Niger's fiscal deficit is expected to widen to 5.8% of GDP in
2020, from 3.6% of GDP in 2019, reflecting
COVID-19-pandemic-related spending and revenue losses, combined
with critical spending on security and development. The draft
budget for 2021 shows a contraction in the fiscal deficit to an
estimated 4.4% of GDP and is considered as a first step towards
spending normalization that will guard against "increased deficits
becoming entrenched", the IMF states.
The IMF urges the Nigerien authorities to uphold structural
reforms, which include the development of the private sector,
increasing access to affordable credit, improving training and
education, especially for girls, and stepping up investment in
digital infrastructure and literacy.
Asia-Pacific
APAC equity markets closed mixed; China +1.7%, India +0.8%,
South Korea +0.2%, Japan -0.1%, and Hong Kong -0.3%.
The Chinese onshore renminbi closed +1.4% ¥6.69/USD today,
which was its best daily performance since being pegged to the US
dollar in 2005. The rally comes on the heels of markets reopening
today from the Golden Week holiday to improving poll numbers for US
Presidential candidate Joe Biden.
The Caixin headline Composite PMI for mainland China, compiled
by IHS Markit and covering manufacturing and services, dipped to
54.5 in September, down slightly from 55.1 in August, but
nevertheless indicated a further steady improvement in business
conditions. (IHS Markit Economist Bernard Aw)
The survey added to evidence that the Chinese economic recovery
was solid in the third quarter. At 54.7, the average PMI reading in
the three months ending September was above the 52.6 recorded in
the second quarter.
The increase in overall order book volumes also held up well,
with the latest expansion supported by a stronger rise in new
export orders.
Backlogs of work continued to increase, albeit more modest when
compared to the rise in new orders. This is likely due to strong
output growth as firms continued to respond to increased demand
following the easing of pandemic restrictions earlier in the
year.
The recovery remained broad-based, with manufacturing and
services driving the expansion in business activity. Manufacturing
output rose for a seventh straight month in September, though the
rate of increase moderated from the over nine-year high seen in
August.
Services business activity expanded for a fifth month in a row,
in part reflecting a sustained recovery in consumer demand.
Seen among the best performers were automakers and producers of
household goods, linked to improved consumer behavior and reopened
retail businesses as the pandemic has been brought under control.
Activity at financial services and technology services also
continued to increase.
A key development driving growth in manufacturing sales was a
surge in merchandise export sales. Overseas orders of Chinese
manufactured products increased at the fastest rate for three years
during September after marginal growth in August. This strong
expansion in exports reflected an increase in the number of
countries reopening their economies and moving towards more normal
market conditions.
New business in the service sector was fueled primarily by the
domestic market, with external demand continuing to deteriorate as
many countries still maintained some international travel
restrictions despite a recent loosening of border controls in parts
of the world.
The restoration of supply chains remained under way, but the
combination of demand revival and stock shortages at distributors
(linked to reduced capacity) continued to affect the ability of
suppliers to make timely deliveries. While the lengthening of
delivery times was modest, and much improved from February, at the
height of the pandemic in mainland China, a persisting issue with
input availability could impact the extent to which manufacturers
can raise production volumes.
Geely Auto has announced its sales results for September,
showing that the combined sales volumes of Geely- and Lynk &
Co-branded vehicles were 126,365 units last month, up by 11% year
on year (y/y). (IHS Markit AutoIntelligence's Abby Chun Tu)
The data include sales in the Chinese market and exports. The
group's sales volumes in China were 118,297 units in September, up
by 6% y/y. In the year to date (YTD), Geely Auto's total sales
volumes were 875,472 units, down by 9% y/y, which represents 66% of
the company's target of 1.32 million units in 2020.
A breakdown of its sales by vehicle type shows that sport
utility vehicles (SUVs) are still in high demand, along with
sedans. SUV and sedan sales stood at 43,183 units and 79,633 units,
respectively, in September.
The company's sales of multi-purpose vehicles (MPVs) totaled
3,549 units in September. Sales volumes of the Lynk & Co brand
surged by 38% y/y to 18,745 units last month.
In September, Geely's sales continued to be underpinned by its
SUV products, the biggest category in its overall sales.
The group's premium brand, Lynk & Co, experienced a sales
growth of 38% y/y in September, owing to additional model
lines.
Electric vehicle (EV) startups NIO and Xpeng Motor have
announced their deliveries in September. NIO reported total
deliveries of 4,708 vehicles last month, comprising 3,210 ES6,
1,482 ES8, and 16 EC6 vehicles. (IHS Markit AutoIntelligence's Abby
Chun Tu)
In the third quarter of 2020, the combined deliveries of the
company's three models, the ES8, ES6, and EC6, were 12,206
vehicles, up 154.3% year on year (y/y).
As of 30 September, NIO had delivered a total of 58,288
vehicles, of which 26,375 vehicles were delivered in 2020. In a
separate statement, Xpeng Motor said it delivered 3,478 vehicles in
September, up 145% y/y.
Thanks to the improved sales results in September, Xpeng's
combined deliveries of its two models, the G3 electric sport
utility vehicle (SUV) and the P7 electric sedan, increased 266% y/y
to 8,578 units in the third quarter.
Two leading EV startups in the Chinese market, the sales of NIO
and Xpeng continued to gain momentum during September thanks to
expanded model lines in the market.
Taiwan's merchandise exports climbed in September at the
fastest pace since February this year, as surging technology demand
from mainland China and the United States provided the key boost to
recent export performance. Looking ahead, the technology sector
will continue to benefit from demand related to distance working
and learning as well as the launch of new products and year-end
holiday demand. However, US-mainland China trade tensions and the
US bans on key mainland Chinese companies will provide some offset,
leading to a possible deceleration in exports during the fourth
quarter. (IHS Markit Economist Ling-Wei Chung)
Exports jumped 9.4% year on year (y/y) in September,
accelerating from an 8.3% y/y increase in August. After expanding
for the third consecutive month, the rate of gain in exports marked
the fastest since February this year (or since June 2018 when
excluding holiday factors).
Climbing at double-digit paces for the second month, shipments
to mainland China and the US remained the key driving forces of
strong expansions in exports. In particular, shipments to mainland
China jumped 15.1% y/y in September, after surging 22.5% y/y in
August. Together with exports to Hong Kong SAR, shipments to both
markets surged 22.3% y/y, driven by a 30.3% y/y jump in electronics
shipments and a 39.8% y/y surge in shipments of information and
communication products.
Concurrently, exports to the US expanded 14.5% y/y in
September, accelerating from a 13.9% y/y increase in August. It was
led by a 28.1% y/y jump in exports of information and communication
products and a 45.7% y/y surge in shipments of toys and sports
equipment to the territory amid increasing activities from staying
at home.
On the other hand, exports to Japan, Europe, and ASEAN - where
non-technology exports accounted for the largest share of the total
- remained weak due to the dampening effect from the COVID-19 virus
pandemic. Exports to these markets recorded a further contraction
of 7.6% y/y, 4.7% y/y, and 4.1% y/y, respectively.
By products, electronic exports continued to provide the key
support to overall export growth, surging by 26.1% y/y in
September, reaching the highest monthly level on record. The rate
of gain marked the eighth straight month of double-digit expansions
and also the strongest since February this year. A 27.1% y/y surge
in exports of semi-conductor products continued to boost
electronics shipments, thanks to robust demand for high-performance
chips.
Concurrently, exports of information and communication products
jumped 22.5% y/y in September, accelerating from a 21% y/y
expansion in August. Shipments of computer components surged 31.5%
y/y, exports of laptop computers and related products jumped 28.2%
y/y, and sales of storage devices climbed 25.9% y/y. They mainly
benefited from increasing demand for products related to working
from home, telecommunicating, and remote learning. These came
despite a very high base effect.
On the other hand, exports of non-technology products continued
to contract but at a slower pace. Shipments of machinery and base
metals recorded narrower declines in September to single digits,
while shipments of plastic products resumed growth for the first
time in almost two years, up 0.9% y/y, partly supported by low
inventory and higher shipments to mainland China amid
reconstruction demand from recent floods.
The better-than-expected results in August and September helped
total exports to resume growth in the third quarter, rising 6% y/y,
which reversed a 2.4% y/y fall in the second quarter. Strong export
growth in the past two months was mainly attributed to surging
demand from mainland China as the stockpiling of necessary
components by the mainland Chinese company Huawei has boosted
related shipments. The government estimated that Huawei alone could
contribute about 40-80% of the monthly increase in shipments during
August and September.
Japan's household expenditures rebounded in August. The
stabilization of growth in confirmed COVID-19 cases and stimulus
measures could help support household expenditures in the coming
months; however, sluggish cash earnings could weaken the upward
momentum. (IHS Markit Economist Harumi Taguchi)
Japan's real household expenditures rose by 1.7% month on month
(m/m) in August following a 6.5% m/m drop in July, although the
level remained below the year-earlier level, recording a 6.9%
year-on-year (y/y) decrease. The improvement was thanks largely to
rebounds in spending for transportation and communication,
furniture and household utensils, and housing. The government's
travel subsidies probably helped lift spending in transportation to
some extent.
Monthly cash earnings declined for the fifth consecutive month
in August, but the contraction narrowed to 1.4% y/y from 1.8% y/y
in the previous month. Although scheduled cash earnings fell by
0.1% y/y for the first drop in 14 months, the softer overall
contraction reflected a narrower decline in non-scheduled cash
earnings in line with the resumption of economic activity, which
helped ease decreases in non-scheduled hours worked. The number of
regular employees rose by 0.8% y/y, reflecting a faster increase in
the number of full-time employees.
Japan's household expenditure is likely to improve because of
the stabilization of new confirmed COVID-19 cases and upside from
travel subsidiaries and other stimulus measures over the near term.
A rise in the index of household-related activity of the Economic
Watchers Survey (EWS) for September signals continued increases in
household expenditures, particularly for food and beverages and
services.
Recent data are mixed, but overall indicate continued modest
economic growth for South Korea as the country recovers from the
COVID-19 virus pandemic recession. (IHS Markit Economist Dan Ryan)
Customs clearance exports (seasonally adjusted, dollar basis)
surged in September, posting numbers well above the pre-COVID-19
level. Imports were only marginally higher than a year earlier, but
this still represented a large September rise.
This resulted in a large September trade surplus, and is likely
to result in a sharp rise in the current account balance when the
data become available. Given the strength of the export and
manufacturing sector, the current account could exceed USD8
billion, a level last achieved in late 2018.
Consumer prices have been trending upwards, but at a very slow
rate. The overall Consumer Price Index (CPI) has risen faster
lately because of volatile components such as food and energy, but
the core CPI still shows an inflation rate of below 1%.
Producer prices remain low on a year-on-year (y/y) basis, but
have lately been increasing because of rising oil prices. As the
oil price trend flattens, producer prices should resume a slight
deflationary pattern, reflecting productivity growth.
The industrial production index fell slightly in August, and
remains down 3% from a year earlier. However, the index is an
inexact measure of manufacturing activity; in addition, the
Purchasing Manager's Index remains at about 50%.
Retail sales continue to surprise on the upside. Given the
damage done to the service sector by the pandemic, it is impressive
that consumer spending has shown y/y gains for several months.
The labor market had done fairly well during the recession,
with the unemployment rate falling and the labor force rising.
However, the labor force fell in August, as discouraged unemployed
people stopped looking for work, and the labor force remains down
nearly 1% from its pre-COVID-19 levels.
Mercedes-Benz has launched the all-electric EQC mid-size sport
utility vehicle (SUV) in the Indian market at an introductory price
of INR9.93 million (USD135,449) for the first 50 customers.
According to a company statement, the automaker will roll out the
EQC in a phased manner, beginning with 13 locations in six cities
including Delhi, Mumbai, Pune, Bangalore, Hyderabad, and Chennai.
This will be followed by other cities later. The EQC is powered by
two asynchronous three-phase AC motors that have a combined output
of 408hp and 765 N.m paired with an 85-kWh lithium-ion battery
pack, which is claimed to offer a maximum range of 400 km on a
single charge (Worldwide Harmonised Light Vehicle Test Procedure
[WLTP]-certified range). The battery can be charged in 21 hours
using a 3.4-kW domestic socket, 10 hours using a 7.5-kW wallbox
charger provided by Mercedes-Benz, and 90 minutes using a 50-kW DC
fast charger. Owners will be able to access over 100 EQ charging
points in 48 cities across the country. The EQC shares its
underpinnings with the GLC platform and comes with extensively
reworked design elements. The model comes with distinct LED
headlights with a light strip that stretches across the front end
and slim LED taillights, 20-inch 10-spoke alloy wheels, a 12.3-inch
configurable digital display for the instrument cluster, and a
12.3-inch touchscreen MBUX infotainment system. In terms of safety,
the SUV comes equipped with seven airbags, blind spot assist,
attention assist, lane departure warnings, and electronic stability
control (ESC). (IHS Markit AutoIntelligence's Isha Sharma)
Uber has partnered with electric vehicle (EV) fleet operator
Lithium Urban Technologies to deploy over 1,000 EVs in India,
reports The Tribune. These EVs, all of them sedans, will be
available for hire through Uber's premier and rental services on
its app in Delhi-NCR, Mumbai, Bengaluru, Hyderabad, and Pune. The
company currently has 100 EVs deployed on its platform and plans to
expand the fleet size to 2,000 in the next 12 months. Prabhjeet
Singh, president of Uber India and South Asia, said, "After our
partnerships with Yulu, Mahindra and SUN Mobility, this is our
fourth partnership in this space and Uber will always remain
committed to providing smarter mobility, building greener cities
and creating healthier lives." Uber has announced its goal to have
100% of its ride-hailing fleet globally to be zero-emission
vehicles by 2040. Earlier, Uber set out its aim to quadruple its EV
fleet to 1,500 in India in 2020. (IHS Markit Automotive Mobility's
Surabhi Rajpal)
According to an IBM statement, the Bank of Thailand (BOT) has
issued USD1.6-billion-worth of domestic debt in recent weeks using
a new blockchain platform for domestic government savings bonds.
(IHS Markit Economist Brian Lawson)
The platform was announced in September 2020, involving the
BOT, the Public Debt Management Office, Thailand Securities
Depository, the Thai Bond Market Association and four banks as
distribution agents (Bangkok Bank, Krunthai Bank, Kasikorn Bank and
Siam Commercial Bank).
IBM Blockchain was the system's blockchain and technology
partner.
The BOT first announced its intention to replace its
traditional distribution system in March 2018, and is now
reportedly planning to extend the new platform to cover all other
government debt, including distribution to both retail and
institutional investors.
According to the article, at end-2019, Thailand's domestic bond
market was worth USD421 billion equivalent, of which 37% was
government debt.
According to IBM, the new system reduces operational complexity
and issuance costs substantially, with the process of selling
government savings bonds being cut from 15 to just two days.
It flagged that the new technology reduces "redundant
validation" and "reduces the costs of reconciliation".
Thailand's change in its issuance procedure sets an important
positive precedent in the use of blockchain technology to replace
traditional issuing procedures, especially where these are
relatively slow and reliant on manual inputs.
Further successful expansion of the new platform would be a
positive indicator encouraging other countries - especially those
in emerging markets with relatively onerous procedures - to
consider change, as would expanded international portfolio inflows
to the Thai bond market given its faster procedures.
IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
