U.S. troops have been training local forces in Taiwan. Jittery investors prepare for China markets reopening. Eleven un-magical secrets from a Disney World insider. Here’s what you need to know today.
Investors preparing for China’s post-Golden Week market reopening have many reasons to hold their breath. You’ve got Evergrande putting strain on the country’s $12 trillion domestic credit market; the impact of Fantasia Holdings Group’s shock dollar-bond default this week; the uncertainty of where Beijing will strike next in its crackdown on excess and bid for “common prosperity”; and relations with the U.S. under the microscope. And there will be intense interest in how the People’s Bank of China can keep liquidity ample, given the wall of short-term debt due this month. It’s wait and see time — and there’s not long left to wait.
U.S. Senate leaders reached a deal to vote on raising the U.S. debt ceiling until December 3, forestalling the threat of default. The agreement would lift the borrowing cap by $480 billion, and a vote could come later Thursday. While the compromise averts an immediate crisis, the partisan battle will ramp back up just as Congress deals with a funding deadline and as Democrats try to muscle through their infrastructure and tax-and-spending plans. The White House said in a statement that President Joe Biden looks forward to signing the bill once it is passed in the Senate and the House.
Asian stocks look set to rise after Wall Street climbed on easing concerns about the U.S. debt ceiling and an energy crunch. Traders are awaiting key jobs data as well as the start of trading in China. Equity futures rose for Japan, Australia and Hong Kong, while U.S. contracts were steady. The yield on U.S. 10-year Treasuries reached the highest since mid-June. The U.S. payrolls report Friday could cement expectations that the Federal Reserve will soon start tapering bond purchases. The dollar was steady.
U.S. troops have been in Taiwan to train local forces for at least a year, to better defend themselves in case of attack by China, according to a U.S. defense official. The Pentagon deployed a special-operations unit and Marine contingent for ground and small-boat instruction, reflecting its concern about the island's tactical capacity in light of Beijing's military buildup. The development is likely to further antagonize ties between Washington and Beijing, just as Xi Jinping and Joe Biden are preparing a virtual meet-up. Biden yesterday told reporters that he and Xi had reaffirmed their agreement on Taiwan. Here’s why Taiwan remains the biggest risk of a China-U.S. military clash.
The World Health Organization called on countries with high vaccination rates to prioritize the delivery of Covid-19 shots to lower-income nations, setting out a strategy for countries to follow to reach a goal to inoculate 40% of the population in every nation in the world by the end of the year, and 70% by mid-2022. In other virus news, a study has found heart damage from Covid-19 extends well beyond the disease’s initial stages, even people who were never sick enough to need hospitalization are in danger of developing heart failure and deadly blood clots a year later.
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It's been more than a year since the global pandemic began ravaging the world's supply chains and logistics networks. And yet, not only are these supply chain issues not getting better, they seem to be getting worse. Used car inventories continue to plumb fresh lows, and prices for second-hand vehicles (an important component for inflation) keep going up. More than 60 ships are now reported to be waiting outside West Coast ports, compared to a pre-Covid average of just one vessel. And now we also have an energy crisis in China impacting everything from iPhones to cardboard boxes to Australian sheep.
On Friday, we should get insight into one more shortage that seems to be making everything more complicated: labor. Economists expect the U.S. payrolls report for September to show 500,000 jobs added last month, which would be an improvement from August's shock report of just 235,000 jobs added (compared to forecasts for 725,000). Much of August's disappointing figure was attributed to a worker shortage as the delta variant spread, with employment in leisure and hospitality particularly coming in flat. Now we'll get to see whether that particular supply snag shows any improvement.
— With assistance by Tracy Alloway
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