China March Industrial production +14.1% y/y (expected +18%) + retails sales & investment data

China ‘activity’ data for March 2021

Industrial Production +14.1% y/y  MISS

  • expected 18.0%

Industrial Production YTD to March +24.5% y/y MISS

  • expected 26.5%, prior was 35.1%

Fixed Assets (excluding rural) YTD +25.6% y/y MISS

  • expected 26.0%, prior was 35.0%

Retail Sales +34.2% y/y BEAT

  • expected 28.0%

Retail Sales YTD +33.9% y/y BEAT

  • expected 31.7%, prior was 33.8%

Retail sales with the beat is indicative of a recovery in domestic consumption. Good news for China which, as is so often the case, has been leaning on exports and the property market to keep the fire in the economy.

 more to come

China Q1 2021 GDP: +0.6% q/q (expected +1.4%)

Economic growth data from China for quarter 1 2021 (January – March inclusive)

0.6% q/q (seasonally adjusted)

  • expected +1.4% (SA), prior was +3.2%, revsied higher from +2.6%

18.3% y/y

  • expected +18.5% y/y, prior +6.5%

A miss for growth, not as strong as was the central estimate.

Trade balance data for March is due from China today

There is no firmly scheduled time for the data release, around 0200GMT is a good guess.

Some moderation in the size of the surplus is expected. Improving imports (expected) will be taken as a sign of firming domestic demand in China.

China trade balance:


  • expected CNY 327.8bn, prior was CNY 516.8bn


Exports y/y:


  • expected +28.6%, prior was +10.9%


Imports y/y:


  • expected +17.6%, prior was -0.2%


USD terms

China trade balance:


  • expected $52.0bn, prior was $78.2bn




  • expected +38.0%, prior +18.1%




  • expected +24.4%, prior was +6.5%

Yellen won’t name China currency manipulator – report

Report on Yellen

The FX semi-annual assessment on FX is due on Thursday. The report says Yellen could scale back criteria for manipulator, which could help Switzerland get off the list.
In any case, the whole manipulation label is a joke. Trump promised to do it on Day 1 and never did and now it sounds like Yellen is pretty much done with the whole charade. You can see how little CHF cared about manipulation talk and they openly manipulated for years.

Fed’s Powell says does not want to return to bad old days of inflation

Further headlines are crossing from Federal Reserve Chair Powell interview on US TV show 60 Minutes


Further now, Headlines via Reuters:


  • reopening too quickly a ‘principal risk’ to recovery
  • Fed will support economy until recovery is complete
  • in assessing progress wants to see labor force participation moving back up
  • Fed does not want inflation to go materially above 2% and return to the ‘bad, old inflation days’
  • does want inflation ‘moderately’ above 2% for some time
  • does not appear the case now that large federal deficits cause inflation
  • some parts of the country more than fully recovered, but real disparities exist
  • lower wage workers who lost jobs should be able to return to them ‘much faster now’
  • for many people, the covid recession is over but for millions of others it is not and ‘we’re going to keep those people in mind’
  • economic recovery has been ‘better, consistently better than I’d expected’, helped by support from congress and the Fed
  • with vaccinations ‘you’re seeing the resumption of what appears to be a very strong expansion’



  • asked if he feared the US a year ago was looking at a great depression scenario, says ‘I never really thought that was a likely outcome’
  • would have been ‘shocked’ if told this time last year that more than 550,000 Americans would die of covid
  • some asset prices are elevated by some historical metrics
  • fed can’t predict asset bubbles, more focused on resiliency of system if shocks occur
  • believes financial system has wherewithal to stand significant shock to markets
  • ‘very low’ chance of a repeat of the 2008 financial crisis
  • ‘most parts of the financial system made it through quite a stress test’ in last year’s economy collapse
  • monitoring situation with Archegos ‘very carefully,’ does not seem to raise issues around stability of the financial system or the institutions involved
  • is concerning that a single client could cause such large losses, suggest ‘significant shortfall’ in understanding of risks
  • fed working hard studying digital currency, but no decision yet
  • possible digital currency could be a benefit, but involves ‘subtle, complex’ set of questions


People’s Bank of China wary of rising household debt – could damage economic recovery

A PBOC research paper is highlighting that a household credit boom could tend to drag down economic growth more so than corporate debt.

  • researchers say household leverage slowed real per-capita GDP growth by 3.7% in five years
  • due to indebted houlsegholds reducing consumption
  • and that highly-indebted households are vulnerable to negative income changes
  • recommend that policy makers strictly control the leverage of households
The rapid increase in household debt in China has been driven by mortgages & a relaxation in lending standards.
A PBOC research paper is highlighting that a household credit boom could tend to drag down economic growth more so than corporate debt.

Eurozone March final services PMI 49.6 vs 48.8 prelim

Latest data released by Markit – 7 April 2021

  • Composite PMI 53.2 vs 52.5 prelim
The preliminary report can be found here. Some modest upside revisions to the final readings as also seen in the earlier French and German reports. The composite reading is the highest since last July as economic activity stabilised towards the end of Q1.
The manufacturing sector continues to take the lead with services activity seen improving slightly amid tighter restrictions. That may yet remain the case in Q2 as the virus situation continues to pose a threat for the time being. Markit notes that:


“Eurozone business activity bounced back in March, returning to growth after four months of decline with an even stronger expansion than signaled by the forecast-beating ‘flash’ data.

“Manufacturing is booming, led by surging production in Germany, and the hard-hit service sector has come close to stabilizing as optimism about the outlook improved further during the month. Firms’ expectations of growth are running at the highest for just over three years amid growing hopes that the vaccine roll-out will boost sales in the coming months.

“Strengthening demand has already led to the largest rise in backlogs of uncompleted work seen for almost three years, encouraging increasing numbers of firms to take on additional staff. Improving labour markets trends should help further lift consumer confidence and spending as we head into the second quarter.

“The survey therefore indicates that the economy has weathered recent lockdowns far better than many had expected, thanks to resurgent manufacturing growth and signs that social distancing and mobility restrictions are having far less of an impact on service sector businesses than seen this time last year. This resilience suggests not only that companies and their customers are looking ahead to better times, but have also increasingly adapted to life with the virus.”