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Daily Archives: 3rd February 2020

3rd February 2020

🇨🇳 How the Chinese Slump will Impact Credit

MARKET CLOSE:
iTraxx Main

45.7bp, -0.7bp

iTraxx X-Over

227.0bp, -4.3bp

🇩🇪 10 Yr Bund

-0.44%, unchanged

iBoxx Corp IG

B+105bp, unchanged

iBoxx Corp HY

B+361bp, -6bp

🇺🇸 10 Yr US T-Bond

1.52%, unchanged

🇬🇧 FTSE 100

6104.72, (+1.14%)
🇩🇪 DAX

12660.25, (+0.47%)
🇺🇸 S&P 500

3327.77, (+0.62%)

Global slowdown to add to woes…

Shut down the world’s biggest factory and all that goes with it (supply lines/travel etc) – and as well as it being the second-largest consumer market, then it naturally flows that there is an obvious hit to global growth.

Shut it down for an extended period of time and policy markers start to get twitchy; Extremely so. Already struggling to officially make 6% for 2020, after recording its lowest annual growth level in 2019 (6.1%), we’re looking at Chinese growth this year coming quite likely with a 4%-handle.

China accounts for over 15% of global growth. Global growth was forecast to come in at 3.4% this year (IMF numbers). The odds are, though, that getting a grip on the spread of the virus is going to become a marathon and high levels of vigilance will remain for months to come. And so the coronavirus’ impact must surely lead the IMF’s next forecast to be lowered again by a few tenths, and maybe (eventually) to below 3%.

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