RBF UCITS Monthly - October 2016

• China’s economic data releases surprise on the upside
• “Hard Brexit” concerns dominated markets through October
• Possible Fed hike in December coupled with ECB QE tightening concerns and revised inflation expectations saw global financial assets sell-off
• Renminbi added to IMF SDR basket; PBoC continue to maintain currency stability against CFETS basket

China’s data releases for September surprised on the upside; retail sales and industrial production were in-line with expectations and CPI beat the market consensus at 1.9%yoy with PPI bouncing into positive territory. The Q3’16 GDP reading matched market expectations at an annualised 6.7%yoy, unchanged from the previous quarter and on track to meet the government’s 6.5-7% target. The services sector once again expanded at a faster rate than the rest of the economy, contributing over 50% to growth. The Purchasing Managers releases for October remained supportive with the official manufacturing print bouncing to a 26 month high and in-line with the private Caixin reading, at 51.2. New orders, employment and raw materials all increased; this has seen some market makers bearish on China rethinking their forecasts and strategies. The non-manufacturing reading also surprised at 51.2, bouncing 1.1 points.

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