Macro News Headlines

In the US, Services PMI rose from 53.7 to 55.1, beating estimates. ADP data indicated that private sector employment rose 162,000 in Sept, down from the 189,000 gain in the preceding month. The ADP average miss of the official Non-farm payrolls is 66,000. Mortgage applications rose 16.6% last week, with refinancings surging 19.6% (to the highest level since Apr 2009) owing to a decline in mortgage rates in the wake of the Fed's pledge to purchase agency MBS to the tune of US$40bn/mth till the economy (particularly the labour market) improves.

In Euro zone, retail sales unexpectedly rose by 0.1% m-m in August, the same pace as it was in July, while the market was predicting a 0.1% m-m drop. In Germany, retail sales rose by 0.3% m-m, after the 1.0% m-m drop in July. A separate report shows that final reading for September service PMI reported 46.1, indicating a contracting service sector, compared to the flash reading of 46.0 and 47.2 in August. The composite reported 46.1 in September, compared to the preliminary reading of 45.9 and 46.3 in August.

In China, non-manufacturing PMI fell to
53.7 in September, indicating a slower expansion in non-manufacturing industries, compared to the 56.3 reading in August. If the macro condition deteriorates further, the central bank might be motivated to resume the RRR cut.

In Australia, export fell by 2.4% m-m in August, a third straight monthly drop, after July’s 3.1% m-m decline. Export to China, Australia’s biggest trading partner, fell by 3.5% m-m in August, after the 16.7% m-m drop in July. Export to Japan, Australia’s second biggest trading partner, continued to increase for a third straight month, by 2.7% m-m in August after 5.3% m-m growth in July. Performance of service index drop further to 41.9 in September, indicating declining service industries for an 8th straight month. A separate report shows the nation’s new home sales fell by 5.3% m-m in August, after the 5.6% m-m drop in July. These non-performing statistics backs the recent 25 bps benchmark rate cut by the central bank governor Steven Glenn. Going forward, we would not rule out the possibility of a further 25 bps cut if the macro economic situation shows no stabilization.