• The Fund’s IDUSD Class was up 0.33%
• Offshore renminbi up 0.24% versus dollar
• IMF raises global growth forecasts for 2017 and 2018; China’s at 6.8% for 2017
• US data robust; but inflation lacklustre and fiscal policy in progress
A mixed October saw the yield on the 10-year US Treasury yoyo from lows of 2.27% to highs of 2.475%, eventually closing only 5bps higher on the month, at 2.38%. Improving US economic data prints, excitement around the drafted tax-plan and anticipation surrounding the Fed Chair position fuelled the initial sell-off in US Treasuries and rally in the dollar; which broke through 94, measured by the DXY Index, up 1.59% over the month. Meanwhile, Brent futures enjoyed a rally to two-and-a-half year highs, rising above $60 per barrel, off the back of the expected supply cut extension, and the offshore renminbi gained 0.24% against the dollar.
The IMF bumped up its global growth forecasts to 3.6% in 2017 and 3.7% in 2018 (from 3.5% and 3.6%, respectively) as a result of further economic expansion in China, the US, eurozone and Japan. The Fund suggested that policymakers should take advantage of the current benign global economic environment to boost growth within their economies, as a protective measure against the next financial downturn. The IMF warned that wealthier nations should consider keeping monetary policy loose until inflation firms up. The Fund forecasts China growth at 6.8% this year and 6.5% for 2018, while PBoC governor Zhou expects growth at 6.9%. He also highlighted concerns over corporate debt, adding that the central bank’s priority is to deleverage and manage financial risks.