Various news agencies reported Wednesday that China was warning the US of “strong countermeasures” after a series of bills supporting the pro-democracy protests in Hong Kong passed the House.
The notice comes as the International Monetary Fund releases the results of a study saying the pace of global economic activity remains weak, in no small part because of the US/China tariff war.
After slowing sharply in the last three quarters of 2018, the momentum of global economic activity remains weak in manufacturing, in particular, has weakened substantially, to levels not seen since the global financial crisis, the IMF said.
TENSIONS RISING
Rising trade and geopolitical tensions have increased uncertainty about the future of the global trading system and international cooperation more generally, taking a toll on business confidence, investment decisions, and global trade, the IMF said.
However, a notable shift toward increased monetary policy accommodation — through action and communication — has cushioned the effect of these tensions on financial market sentiment and activity, while a generally resilient service sector has supported employment growth. As a result, financial conditions remain generally accommodative and, in the case of advanced economies, more so than in the spring.
That said, the outlook remains precarious, the IMF said. Global growth was forecast at 3.0% for 2019, its lowest level since 2008–09 and a 0.3 percentage point downgrade from the April 2019 World Economic Outlook.
Growth was projected to pick up to 3.4% in 2020 (a 0.2 percentage point downward revision from April), primarily reflecting a projected improvement in economic performance in a number of emerging markets in Latin America, the Middle East and emerging and developing Europe that are under macroeconomic strain.
In contrast, growth was expected to moderate into 2020 and beyond for a group of systemic economies comprising the US, Euro area, China and Japan, which together account for close to half of global GDP, the IMF said.
The emerging market economies that have driven part of the projected growth decline in 2019 and account for the bulk of the projected recovery in 2020 include those that have either been under severe strain or have underperformed relative to past averages, the IMF said. In particular, Argentina, Iran, Turkey, Venezuela and smaller countries affected by conflict have been or continue to be experiencing very severe macroeconomic distress.
IT COULD GET SLOWER
Yet, with uncertainty about prospects for several of these countries, a projected slowdown in China and the US, and prominent downside risks, a much more subdued pace of global activity could well materialize, the IMF said.
To forestall such an outcome, policies should decisively aim at defusing trade tensions, reinvigorating multilateral cooperation and providing timely support to economic activity where needed, the IMF said.
To strengthen resilience, policymakers should address financial vulnerabilities that pose risks to growth in the medium term, the IMF said. Making growth more inclusive, which is essential for securing better economic prospects for all, should remain an overarching goal.
CATTLE, BEEF RECAP
Cash cattle changed hands last week at $108 to $109 per cwt, up $1 to $2 from the previous week, while dressed-basis trading was at $172, up $2.
The USDA choice cutout Wednesday was up $0.826 per cwt at $218.28, while select was down $0.11 at $191.37. The choice/select spread widened to $26.91 from $26.54 with 103 loads of fabricated product sold into the spot market.
No cattle were posted Wednesday for delivery against the Oct contract.
The CME Feeder Cattle index for the seven days ended Tuesday was $145.12 per cwt, up $0.03 from the previous day. This compares with Wednesday’s Oct contract settlement of $145.22, up $0.22.