Chinese Data Lifts Sentiment Despite Questions About Its Veracity

Overview:

The veracity of Chinese data will be questioned by economists, but today’s upbeat reports round out a picture that began with stronger exports and a surge in lending. Chinese officials, we argue, had a “Draghi moment” and decided to do “whatever it takes” to strengthen the economy in the face of US tariffs and during the 70th anniversary of the Revolution. The stronger Chinese data helped lift extend the for the fourth session. Europe’s is struggling, and its five-day rally is at risk. Benchmark yields are rising. The US is near 2.60%. It bottomed in late-March near 2.34%. The yield on the German Bund approached minus 10 bp at the end of last month and is now near +10 bp. The UK Gilt yield dipped below 100 bp a few weeks ago and is now near 1.25%. Japan’s yield remains below zero. The itself is mostly heavier, though softer New Zealand inflation has heightened speculation of a rate cut as early as next month, and this is weighing on the . The is firm above $1.13, while the greenback is flat against the near JPY112.00. Most emerging market currencies, including and , are firmer.

Asia Pacific

China reported a batch of stronger than expected data. jumped 8.5% year-over-year. The median forecast in the Bloomberg survey was for a 5.9% pace. surpassed the median forecast for an 8.4% rise and instead increased by 8.7%. Fixed asset investment matched the 6.3% projected increase. These are said to translate into 6.4% year-over-year , matching the Q4 performance. Many economists find inconsistencies in Chinese data and often question the accuracy. Nevertheless, the data seems broadly consistent with official efforts to strengthen the economy.

Yet it does seem that challenges in the region remain and China is still at the center of it.

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