What I Learned This Week

Is QE coming to China?

In WILTW June 21, 2018, we noted that China's response to the escalating trade war with the U.S. would result in a weaker yuan, which would not be good for other emerging markets, as was the case after the August 2015 yuan devaluation. Since then, several Chinese economic indicators have deteriorated. Consider the following: July's unemployment rate was reported at 5.0%, 0.3 percentage points higher than June and 0.1 percentage points higher than July 2017; Power generation grew 5.7% year-over-year in July, versus June's growth rate of 6.7%. Industrial output expanded 6.0% year-over-year in July, missing expectations for the fifth month. Retail sales growth over the past several months…

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