Leading indicators paint a mixed picture
1: Home sales to see lift from lower yields (p.3).
2: Commodity prices generally weak (p.4).
3: Credit impulse weak but ray of light in M1 (p.5).
4: Export model bottoming - but the trade war is currently the main driver of exports.
Our view: more weakness short term but moderate recovery from Q2 19.
Trade war adds uncertainty to the outlook.
Financial implications
Equities : still high volatility short term but outlook better when economy recovers from Q2 19.
EM : more headwind short term but set to turn into a tailwind from Q2 (see top right chart).
Global bonds : a weaker China cycle short term = disinflationary pressures and downward pressure on bond yields - all else being equal.
Commodities : metals are set to be underpinned by Chinese stimulus, which benefits construction and infrastructure. Oil price sell-off overdone (p.16).
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