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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CHINA DATA
China November activity figures were weaker across the board relative to expectations. IP printed at 2.2% y/y (3.5% forecast), while retail sales fell -5.9% (-4.0% forecast). Fixed asset investment eased to 5.3%, (5.6% forecast), while property investment fell to -9.8% (-9.2% forecast). The unemployment rate edged up to 5.7% (5.6% forecast), while earlier new home prices fell -0.25%, a slightly reduced pace compared to -0.37% in October.
- It's hard to find positives in these figures and as we noted yesterday ahead of the data, near term growth prospects are being impacted by the current Covid wave. Higher frequency indicators, like metro rail rides, are well down in some major cities such as Beijing. So, a sharp turnaround in December prints is unlikely.
- This may keep indicators like the Citi China EASI bias lower, see the chart below. However, unlike through April/May or through August/September, weaker data outcomes aren't equating to higher USD/CNH levels at this stage (this is the other line on the chart, note it is inverted).
- A weaker growth backdrop is a well-established theme in China at the moment, and the market is looking to the 2023 outlook for now at least, when the move away from CZS should drive a firmer rebound.
- USD/CNH got to 6.9655 post the data, +0.30% for the session, but we are now back to 6.9600. Broader USD sentiment is also positive amidst higher US cash Tys yields.
- China bond yields are close to unchanged, despite the earlier net 150bn injection via the 1yr MLF. Mainland equities are weaker for the session but if anything, markets are slightly higher post the data outcomes. The CSI 300 was last around -0.35%.
Fig 1: Citi China EASI & USD/CNH (Inverted)
Source: Citi/MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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