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Macro: A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021? and more

In today’s briefing:

  • A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021?
  • US Financial Markets Ignore Economic Data as Election Outcome and COVID-19 Uncertainties Linger

A Left-Field Thought: Will Rising Chinese Liquidity Trigger A World GDP Boom in 2021?

By Michael J. Howell

• High levels of Global Liquidity and V-shaped Economic Rebound
• Economies, so far, rebounding faster than after 2008 GFC
China has unusually not created much liquidity in 2020
• Latest evidence show acceleration in Chinese Shadow Bank lending

US Financial Markets Ignore Economic Data as Election Outcome and COVID-19 Uncertainties Linger

By Said Desaque

The outcome of the 5 January Senate races in Georgia could determine whether Democrats gain effective control of the upper chamber, thereby increasing the chances of an unfettered economic agenda being pushed by a Biden Administration. The corporate sector will be adversely impacted by the Biden Administration’s planned economic measures, while the yield curve should steepen due to higher government borrowing.

The US labour market continues to heal at a much faster rate than envisaged by the Fed, despite widespread fears of a fiscal cliff engulfing the economy. Prospective inflation trends will dictate the timing of the first increase in the federal funds rate off its zero-bound floor.

The second wave spread of the COVID-19 virus has been faster-than-anticipated, but an incoming Biden Administration will have to wait until after inauguration to implement national measures to mitigate rising infections. There will be great reluctance to sanction extended local lockdowns with the onset of the Christmas holiday season, thereby implying rising infections for the foreseeable future.
There are rumours already circulating about new appointments under a Biden Administration, including the replacement of Fed Chair Powell when his term expires in 2022.

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