Evergrande avoids default

The trend was rather optimistic in Asia after Evergrande, the Chinese property developer paid the interest due on a USD bond. There were 3 days left to do so before a formal default. Chinese authorities are clearly trying to buy time to come up with a credible crisis resolution plan, especially after the sale of Evergrande’s property services business failed this week. Yesterday, the S&P 500 hit a new record high in the US despite the fact that the 10-year yield touched 1.7%. The continued decline in jobless claims confirmed the improvement in the labor market.

The first PMI estimates for October are released today. If Japan gave the trend, it was a good one, as the manufacturing PMI rose to 53, while the service PMI climbed back above 50 (50.7). On the other hand, retail sales fell again in September in the UK, while the Bank of England seems to be on the verge of raising its key rate to counter inflationary pressures. This will be discussed in the Weekly Economic Outlook to be sent out later today.

The EUR/USD exchange rate is little changed at around 1.1630.

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