Snapshot - Monthly viewpoint
Janet Mui: weekly economic update
China and the US agree in principle to remove tariffs, sparking a wide rally in equities. In the UK, the Bank of England has held its key interest rate unchanged – while indicating a readiness to cut.
US-China trade development
- China and the US have agreed to roll back existing tariffs as they work toward a deal, according to reports on Thursday. Markets rallied in response.
- If this step results in the release of pent-up investment that has been hold back by trade uncertainty, we think the global economy will stabilise instead of further slowing down.
German industrial production
- German industrial production continued to contract in September on a year-on-year basis.
- There may be some evidence that the worst is over: the latest German factory orders are starting to improve.
- Positive developments in USChina trade would help the German economy stabilise.
Bank of England meeting
- Policy remained unchanged at the Bank's November meeting, as an upcoming general election and Brexit extension added more uncertainty for policymakers.
- Two members of the Monetary Policy Committee unexpectedly voted to cut rates by 25 basis points, citing Brexit and global risk as the rationale.
- If global growth fails to stabilise this could prompt policy easing, thre Bank indicated.
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