Will China's malaise spread to the U.S. economy?

Strong U.S. employment growth stands in stark contrast to Chinese market woes.

Robert Johnson, CFA 11 January, 2016 | 6:00PM

This week's market action was really all about China. The pain was widespread, as most equity markets were down 6%-9% since Dec. 31, 2015--drops that look more like monthly or even annual data.

As one might guess, China problems had the most knock-on effect on other emerging markets, which were down 9%. Europe and the U.S. were both down about 6%. With new fears out of the Middle East and colder weather in the central U.S., commodities did the best of a very bad lot, falling "just" 4%. Of course, safe-haven bets and slower world growth outlooks drove the interest rate on 10-year U.S. Treasuries down from 2.27% to 2.13% since the end of 2015, making bonds the only real winner this week.

Data out of China indicated that the Chinese economic malaise hasn't been broken. And like the oil industry, the China issue will probably be modestly worse than expected and last longer than thought just a few months ago. There's no quick rebound in the cards, either. That fact was driven home by a pair of purchasing manager reports that resumed their declines in December after a couple of more promising months.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

About Author

Robert Johnson, CFA

Robert Johnson, CFA  Robert Johnson, CFA, is director of economic analysis for Morningstar.

© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies