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China: Economic news looking better, although mixed – AmpGFX

Greg Gibbs, analyst at Amplifying Global FX Capital, points out that the Chinese trade and credit growth data on Friday gave risk assets a solid kick, contributing to the break higher in US and global bond yields from their recent range.  

Key Quotes

“Chinese exports rose 14.2%y/y in March, more than 6.5% expected.   Over the first three months of the year, exports rose +0.9%y/y, not great, but improved from the picture a month earlier when exports were down 20.7%y/y in February, down 5.3% 3mth/yoy.”

“However, Chinese imports fell 7.6%y/y in March, below 0.2% expected.   So this should temper the positive vibe from strong exports, suggesting that Chinese businesses are not receiving a big pick up in orders from domestic and export markets to justify higher imports.   It suggests that the rebound in exports might overstate the underlying strength in global demand.”

“New total aggregate credit rose 40% 3mth/yoy in March; this follows a contraction of around 20% y/y in 2018 over 2017.   Note we are talking about the rate of change in new credit, not the stock of credit.”

“The data points to evidence that China has eased monetary conditions through the early months of the year to support economic growth in China; including easing off on its efforts to reign in shadow-banking sectors.   This is part of a broader stimulus effort including tax cuts and infrastructure spending.”

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