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rssChina May CPI 1.3% y/y (vs. expected 1.6%) and PPI 9.0% y/y (vs. expected 8.5%)
Inflation data from China for May 2021
CPI 1.3% y/y
- expected 1.6% y/y, prior 0.9%
- food prices expected to fall, pork prices continue to plunge
- for the month/month -0.2%
PPI 9.0% y/y, higher than the median estimate and fastest since 2008
- expected 8.5%, prior 6.8%
- impacted by rising commodity prices
- for the m/m, +1.6%
Consumer-level inflation down a little but producer level inflation up very quickly indeed. PPI not flowing through to CPI this month at least though.
Oil data indicated the 3rd consecutive week of US stocks drawdown. Add in these 2 other price-supports also.
Comments on oil via ANZ, pointing to expectations of stronger demand.
ANZ reasoning this is due to accelerating vaccinations and easing travel restrictions.
- Recent traffic data suggests travellers are hitting the roads as restrictions ease. Traffic congestion in 15 European cities is at its highest since the pandemic began, according to TomTom data. The boost to demand is expected to be strong.
And, on the supply side:
- This is backed up by signs of tightness in the physical market. The Middle Eastern Dubai benchmark is trading at its steepest backwardation in almost a year.
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Here’s a restrained view on the Chinese yuan – more two-way trading, not a sharp downtrend
HSBC with a restrained view for RMB, looking for its appreciation to slow and prompt some range trading, not a sharp reversal.
- We believe the recent comments and countercyclical measures out of China … suggest that, while there is no line in the sand, there is still a policy preference for basic stability of the RMB exchange rate.
- We do not believe the recent downward momentum is the beginning of a long-term RMB appreciation trend. Cyclical indicators are pointing to a likely slowdown of GDP growth and smaller yield advantage for China in 2H21. We expect these cyclical developments to see net FX flows to China moderating in 2H21.
- Broad USD weakness may be tested, if the Federal Reserve’s tapering debate picks up later in the year and some of the generous USD liquidity conditions could subside later this year. Our economists expect an official tapering announcement at the end of the year and implementation in 2022.
- We think that China’s broad FX framework has not changed, namely two-way capital account liberalisation is maintained with the aim of achieving a balanced flow. Our base case sees USD/RMB exhibiting more two-way movement and then rise slightly later this year, when China’s outbound investment liberalisation accelerates, likely in 2H21.
(I bolded those Fed comments from HSBC that were part of the yuan note).
Weekly offshore yuan (USD/CNH) candles showing the appreciation trend for yuan since the middle of last year.
US Indices end the session mixed. Dow down. S&P unchanged. Nasdaq up
NASDAQ closes at the highest level since April 30
The major indices close mixed with the S&P unchanged. The NASDAQ index higher. The Dow industrial average lower.
- S&P close just below record closing level of 4232.60
- NASDAQ closes at highest level since April 30
- Energy sector was the biggest gain or help by WTI crude oil which closed up one dollar and above $70 for the first time since October 2018
- Real estate and energy sectors closed at record levels
- NASDAQ post three day win streak
The final numbers are showing:
- S&P index rose 0.70 points or 0.02% at 4227.22
- NASDAQ index close up 43.19 points or +0.31% at 13924.91
- Dow felt -30.42 points or -0.09% at 34599.82.
For the Russell index it led the way to the upside with a gain of 24.58 points or 1.06% at 2343.76.
Thought For A Day
Global debt rises $32 trillion in 2020 amid Covid pandemic: Moody’s
IRS Chief Rettig: Congress should provide clear authority on bitcoin transfers
The low for the day reached $31000 so far today
The IRS Chief Rettig is saying:
- Congress should provide clear authority requiring large crypto currency transfers to be reported to the IRS.
A problem with the ransomeware problems of late is that tracking bitcoin was thought to be impossible to do and that it promoted bad actors. Yesterday, the US government said that they got back most of the ransom paid by Continental Pipeline. That has led to some uneasiness in the crypto currency world where players assumed their accounts were sacred only to them.
This declaration from Rettig is a step in the regulation direction for crypto.
The price is currently down $-2240 or -6.49% at $32,267. The low price reached $31,004.
European shares end the day with mixed results
France’s CAC, and UK FTSE 100 close higher
The major European indices and the day with mixed results in an up and down session
The provisional closes are showing:
- German DAX, -0.2%. The intraday high reached +0.32%. The low was at -0.27%
- France’s CAC, +0.2%. The intraday high reached +0.47%. The low was at -0.04%
- UK FTSE 100 +0.4%. The intraday high reached 0.63%. The low was at -0.05%
- Spain’s Ibex, -0.1%. The intraday high reached +0.45%. The low extended to -0.58%
- Italy’s FTSE MIB, -0.1%. The intraday high reached +0.39%. The low extended to -0.48%
In other markets as European/London traders look to exit:
- SPot gold is down $-7.20 or -0.38% at $1892.
- Spot silver is down $0.26 or -0.96% at $27.62.
- WTI crude oil futures are up $0.44 or 0.64% at $69.67. The high price has extended to $69.81. Recall from yesterday the high peaked at $70 even and found willing sellers. The price today is off it’s lows at $68.47
- Bitcoin is trading down $1760 or minus 08.0 percent at $31,730.
World Bank global to growth reach 5.6% in 2021
World Bank on global growth
- Global growth to reach 5.6% 2021 up from 4.1% in January. Strongest postrecession pace in 80 years
- Gains in global growth comes after a -3.5% contraction in 2020
- Forecasts 2022 global growth at 4.3% and 2023 growth at 3.1%
- Increasing global growth reflects stronger US fiscal support, and highly unequal vaccine access
- Sees US 2020 growth that 6.8%. That is up from 5.5% in January. In 2020 the US contracted by -3.5%
- Sees China’s 2021 growth at 8.5% versus January’s 7.9%. Contracted -2.3% in 2020.
- Sees global inflation to rise about one percentage point in 2021. May not warrant a policy response
- Long-term expectations point to continued low and stable inflation.
- Market concerns about persistent higher inflation in advanced economies could cause emerging market borrowing costs to rise
- Sees emerging markets ex-China growth at 4.4% in 2021 versus 3.4% estimate in January. In 2020 emerging markets ex-China felt -4.3%
Some pretty decent increases in growth forecasts. Not much on inflation in their report which is the driving force for the markets. The US CPI data will be released on Thursday with expectations of a 0.4% rise after a 0.8% increase last month.