China Exports Decline

Earlier today, China's trade balance data was released, showing that the Chinese economy's trade surplus expanded significantly since May, rising to $60.24 billion, from $43.03 billion in July and above the market estimates of $49.35. The trade surplus comes in light of declining exports but also a sharper import slump. The drop in exports marks a second consecutive monthly decline with financial markets trading cautiously on the data. On an annualized basis, Chinese imports fell 13.80% in August which marks the 10^th consecutive month of deteriorating imports.While it is widely expected that China will experience a significant downturn in economic activity this year, the markets are more concerned by the pace of this deceleration which could result in a ‘hard landing’ for the Chinese economy. Being the second largest economy, a Chinese slowdown could result in further deterioration of the global economy as the US prepares to raise interest rates.

The final revision for the Eurozone’s aggregate second quarter GDP is due for release today. Estimates point to an unchanged print at 0.30% compared to earlier estimates. At its latest meeting last week, the European Central Bank made downward revisions for both the GDP and inflation projections for 2015, 2016, and 2017, highlighting the perception that continued headwinds face the Euro Area economy. The Central Bank expects to see growth subdued in the Eurozone for most of this year and expects to see a turnaround only from 2017 onwards as external factors impact the regions growth prospects. While the ECB has refrained from expanding its sovereign bond purchases, it left the door open to the possibility of going beyond the September 2016 deadline to purchase sovereign bonds should growth fail to show any signs of pickup in the Eurozone.