Disappointing Chinese Trade Data Renews Global Growth Concerns

Equities continue to trade lower for the second consecutive day while Treasury yields and swap rates drifted down this morning, after weak Chinese trade data and lower commodity prices renewed concerns over the global growth outlook.  The report showed a decline in both Chinese imports (-8.7%) and exports (-6.8%) in November, leaving a trade surplus of $54.1 billion (versus $64Be).  Imports have now fallen 13 consecutive months while exports have fallen five months in a row.  The trade data follows a report last weekend that showed manufacturing conditions in China fell to the weakest level in over three years, adding to pressure on Beijing to unveil additional monetary stimulus.  Commodity prices are broadly lower as well, with WTI crude falling breaching below $37 and Brent below $40 for the first time in nearly seven years, although they have both bounced off the lows since then.

The US economic data calendar today was light again, with the exception of the JOLTS Job Openings report.  The report showed 5.4 million jobs open in October, back to pre-recession levels, compared with economists’ median estimate of 5.5 million.  Despite the backward-looking nature of the report, being released on a two-month lag, markets tend to pay attention to it because Fed Chair Yellen has stated she follows it closely.  The quits rate remained unchanged at 1.9% and the overall report appeared to reaffirm a generally firming labor market.

The Fed is now in the quiet period ahead of next week’s meeting, so there are no scheduled Fed speakers, but we do have a $24 billion 3-year note auction scheduled.