Overseas Headlines – October 24, 2017


China shoppers rein in spending on cookies to pop drinks: survey

Growth in sales of consumer goods ranging from biscuits and candies to toothpaste and shampoo has slowed in China to a five-year low, a survey shows, in a major challenge for global firms seeking to attract buyers in the world’s most populous nation. Demand for fast-moving consumer goods has waned in the world’s No.2 economy, with sales growing 2 percent in the first half of 2017 versus year-ago levels, a report from consultancies Kantar Worldpanel and Bain & Co shows. That is the weakest half-year growth since 2012, according to the report based on a survey of 40,000 households. While sales rose 3.6 percent in the third quarter, it is still a far cry from a near 20 percent growth just over half a decade ago. The data gives a gauge of how China’s consumers are spending their money – key as Beijing’s leaders, global investors, and brands such as Nestle, Pampers owner Procter & Gamble or Coca-Cola look to tap the spending power of the country’s near 1.4 billion potential shoppers.




German bank regulator urges EU to be ready for Brexit cliff edge

European Union regulators need temporary fixes in place to prevent market distortions in case banks based in Britain face a Brexit without a deal, Germany’s financial watchdog said. Britain’s EU departure in 2019 “certainly won’t be a piece of cake” and given that five rounds of divorce talks have not made enough progress, regulators must assume a “cliff edge situation”, Felix Hufeld, president of BaFin, said. “It’s crystal clear in my mind that whatever the outcome of Brexit, it will cost a price both for British and EU27 consumers. The cost of doing business will go up,” Hufeld said. Regulators will need temporary solutions to avoid dangerous “distortions” in markets while entering the post-Brexit world, Hufeld said at an event in London. Frankfurt is emerging among the winners in a battle between EU financial centers to attract banks in London who want to open new hubs in the bloc to continue serving customers there. Goldman Sachs Chief Executive Lloyd Blankfein said last week after a meeting with Hufeld that he will be spending “a lot more time” in Germany’s financial center.




Bond Traders Are Piling Into a Fed-Proof Bet

Traders in the $14.2 trillion Treasuries market have found a way to avoid fighting the Federal Reserve, or at least its imminent leadership change. Whether President Donald Trump nominates Fed Board Governor Jerome Powell, Stanford University economist John Taylor or even Chair Janet Yellen to lead the central bank, one trade is foolproof in the eyes of many on Wall Street: betting on a flatter U.S. yield curve. By most measures, the spread between short- and long-term Treasuries is close to the slimmest in a decade as the Fed raises rates in the face of tame inflation. To strategists at many of Wall Street’s biggest bond dealers, including BMO Capital Markets, Cantor Fitzgerald and Wells Fargo, no one on Trump’s short list is going to change that momentum. Yellen, considered the most dovish of the group, has already topped market expectations in 2017 by hiking twice and setting up a third increase in December. Traders are pricing in just over two full rate increases by the end of 2018, while the central bank projects four.