ATF indexes rise on strong PMI data

The latest figures signal that China’s recovery is on track

ATF indexes rise on strong PMI data
Manufacturing boost lifts Chinese bonds.

(ATF) The benchmark China Bond 50 index rose Monday, climbing 0.01% along with the ATF ALLINDEX Corporates, Enterprise, Financial and Local Governments sub-gauges, as China printed above-consensus PMI figures for September. 

While almost all the bonds of the indexes climbed, the biggest price increases were posted by Datong Coal Mine (0.02%), Xi’An Hi-tech (0.02%) and Jizhong Energy (0,01). Only the bonds of China Development Bank fell, sliding 0.09%.

The official manufacturing PMI came in at 51.5 for the month, from 51.0 in August, while the non-manufacturing PMI climbed to an eight-year high of 55.9 from 55.2 in the previous month. Furthermore, the Caixin manufacturing PMI, although softening slightly from August’s 53.1, posted a robust performance, coming in at 53.0.

The ATF China Bond 50 Index climbed 0.01%

“The higher official PMIs for both manufacturing and non-manufacturing, together with the still-solid Caixin manufacturing PMI, suggest China’s growth recovery is on track (...),” stated Ting Lu, Chief China Economist at Nomura in Hong Kong, in a research note.

Improved global demand was a major driver of the official and Caixin manufacturing PMI as new orders and new exports orders increased across both indexes. Meanwhile, a continued recovery in services driven by a surge of activity in transportation, accomodation, catering and telecommunications drove the rise of the non-manufacturing PMI. 

FOREX COMMENT: “Assuming that greater political calm returns prior to year-end, the dollar will resume its decline. The currency's fundamentals are only getting worse.”  

However, the labour market remains under pressure, wrote Erin Xin in a research note. “While the (...) employment sub-indices edged up in September for both the manufacturing and non-manufacturing sectors, the readings still showed contraction as they remained below the water line. The Caixin manufacturing employment index just barely showed contraction.”