September 1, 2021
–Caixin/Markit PMI for China fell to 49.2 from 50.3, a sign of contraction. This, as official Mfg PMI shows that New Export Orders continue to slide (around 47). At the same time, more press coverage is being given to problems at Evergrande. As Ben Hunt writes, “Evergrande is the largest player in the largest sector in the Chinese economy. Evergrande owns 231 million sq meters of land in 234 cities. Evergrande is the largest Chinese issuer of dollar-denominated corporate debt in the world, with a balance sheet of more than $350 billion.” And they are holding fire sales to try to prevent default.
–Today in the US: ADP expected 625k from 330k last. Markit PMI expected unch’d at 61.2. ISM Mfg expected 58.2 from 59.5 with Prices 83.8 from 85.7.
–Yields rose slightly with tens up 2 bps to 1.302%. There continues to be a program buyer of TYZ 136c which settled 19 vs 133-145 (another 10k yesterday). Peak one-year eurodollar calendar is still EDU’22/EDU’23 which is now 57.5.
