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China December trade data, CNY terms: Exports +10.9% y/y (vs. expected +7.1%) & Imports -0.2% y/y (vs. +0.1%)

  
Analysis, Economy

Yuan terms

China trade balance CNY 516.81bn

  •  expected CNY 457.8bn, prior was CNY 507.1bn

Exports BEAT at +10.9% y/y

  • expected +7.1%, prior was +14.9%

Imports MISS at -0.2% y/y

  •  expected +0.1%, prior was -0.8%
USD terms

 

  • China trade balance $78.17bn: expected $72bn, prior was $75.4bn
  • Exports beat +18.0% y/y: expected 15.0%, prior 21.1%
  • Imports beat +6.5% y/y: expected 0.1%, prior was -0.8%

China’s trade surplus with the US was USD 29.92bn for the month of December

 

 

  • vs. 37.42bn in November

 

China’s trade surplus with the US was USD 316.91bn for the whole of 2020.

more to come

The UK’s Sunak says the economy will get worse before it gets better

  
Analysis, Economy

Rishi Sunak is the UK chancellor

ICYMI, he was speaking in the House of Commons, saying that while the vaccine provides hope, there was a need for tougher national restrictions to contain the spread of the virus and that this would have a “further significant economic impact”.

  • and the economy is going to get worse before it gets better”
Guardian has more, although I’m sure there are other reports around in UK media should you prefer those.

Eurozone December final services PMI 46.4 vs 47.3 prelim

  
Analysis, Economy

Latest data released by Markit – 6 January 2021

  • Composite PMI 49.1 vs 49.8 prelim
The preliminary report can be found here. The slight downwards revision comes amid some disappointment from Italy and a weaker revision to the German readings as well, but overall this still marks an improvement compared to November.
This reaffirms that economic activity is seen contracting at just a marginal pace in December while business confidence is glowing amid vaccine optimism. Markit notes that:

“The eurozone economy contracted for a second successive month in December, deteriorating at a slightly faster rate than previously thought at the end of the year due to intensifying COVID-19 restrictions. Service sector activity in particular fell more sharply than estimated by the earlier ‘flash’ PMI estimate, as more countries stepped up their fights against rising virus case numbers.

“While the data indicate a renewed decline in eurozone GDP in the fourth quarter, the downturn appears to have been far less severe than seen in the second quarter, thanks to sustained strong manufacturing growth, rising global trade and lockdowns having been less onerous than earlier in the year.

“Worse may be yet to come before things get better, especially as the latest survey data were collected before the news of the new – more contagious – strain of the virus. Service sector activity in particular looks likely to remain constrained by severe social distancing in the early months of the new year. The risk of a technical recession, with GDP also falling in the first quarter has therefore risen.

“More encouragingly, businesses grew more optimistic about their situation in one year’s time, reflecting the light at the end of the tunnel offered by vaccine developments. A recovery will hopefully be seen from the second quarter onwards.”

(more…)

BOJ December monetary policy meeting Summary of Opinions

  
Analysis, Economy

Bank of Japan Dec 17 and 18 policy meeting summary

Main Headline points via Reuters:

 

  • BOJ must examine extending deadline, possibly expand content, of fund-aid programme timing with compilation of govt’s new stimulus package
  • important to examine BOJ’s monetary easing as pandemic means it will take even more time to achieve BOJ’s price goal
  • good to eye March meeting in laying out findings of BOJ’s policy examination as it will focus on operation of current framework
  • BOJ must comprehensively review anew what strategy it should take in hitting its price goal
  • BOJ must examine its strategy, policy means and communication to ensure japan does not return to deflation
  • BOJ doesn’t need to tweak YCC, can also maintain its commitment including its pledge to hit 2% inflation
  • BOJ must examine pros and cons of its policy, must seek ways to enhance sustainability, effect of its policy as needed
  • BOJ must seek ways to more flexibly adjust its ETF buying as its monetary easing is prolonged
  • BOJ must be ready to effectively respond to changes in economy, financial conditions by heightening sustainability of YCC, asset buying via more flexible operation
  • more meticulous control of yield curve will become necessary as moderate steepening of yield curve has some merits
  • important for BOJ to take swift, effective policy response in coordination with govt, other central banks
  • appropriate for BOJ to cut short, long-term yield targets, strengthen commitment on monetary easing
  • BOJ must help companies achieve sustainable growth, creating bigger corporate bond market important
  • BOJ must continue to keep eye out on risks including abrupt moves in FX market
  • there is considerable risk japan will return to deflation

 

More of the same from the Bank, there is no indication of any winding back of easing. The BOJ highlight March as a meeting to watch for perhaps even more.

Interesting the summary makes specific mention of ‘abrupt moves in FX’. This is code for strengthening yen, the BOJ does not want the yen to gain and will attempt to jawbone it lower if it does. You may recall the news from last week that Prime Minister Suga has drawn a line in the sand at 100 for USD/JPY.
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