Slow Growth in China and Central Banks Step Up Easing

U.S. Review

U.S. Manufacturers Facing Headwinds

• U.S. manufacturers were already struggling with a stronger U.S. dollar when the currency appreciated further against the euro and Canadian dollar as central bankers in those regions made unexpected moves. The negative effects of oil are also starting to show up in regional manufacturing surveys.
  
• Housing starts improved in December with upward revisions to the prior month. Unfortunately, permits look a bit weaker, suggesting starts could see some payback in the coming months. Homebuilder sentiment did not add much optimism to the housing market recovery.

Global Review

Slow Growth in China and Central Banks Step Up Easing

• At the start of this week, the IMF downgraded its forecast for global growth citing among other things "a reassessment of prospects in China" and it cautioned advanced economies that "monetary policy must stay accommodative."
  
• The year-over-year rate of Chinese GDP growth released this week was a shade stronger than the consensus expected, but the sequential growth rate shows that growth is slowing.
  
• The European Central Bank embarked on an ambitious quantitative easing program and the Bank of Canada surprised financial markets with an unexpected rate cut.