Take Five: Fighting fires

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 13, 2019. REUTERS/Brendan McDermid

How big a risk is a global economic recession? Recently, hopes of a fledgling growth turnaround were doused by data showing China’s factory output growth slowing in October and Japan’s economy grinding to a standstill in Q3. And Germany only narrowly avoided a recession in that period.

Cue “flash” PMIs due on Nov. 22 from Japan and the euro area; numbers widely regarded as a forward-looking indicator of economic health.

October PMIs pointed to some stabilization, raising expectations that hefty central bank easing had helped the global economy to bottom out.

On the flip side, Sino-U.S. trade uncertainty drags on, making it harder to call a turnaround in the data. No wonder then, that after weeks of heavy selling, government bond yields are heading down again.

Yet European Central Bank Vice President Luis de Guindos said on Thursday risks of a European recession were “very low”. The PMIs might bear that out — or not.

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