Pay Attention! We Got China Credit Data Overnight

Ok, so it’s Friday. And before you get too excited about that, remember that all it means is that two days from now it will be Monday. Bummer, right?

Well overnight we got the latest read on China TSF and new RMB loans which, at this point, is something you need to watch really – really – closely for signs that the PBoC’s efforts to rein in leverage and speculation are feeding through to the actual data. Here’s a quick bullet point summary:

  • China’s April New Loans 1.1t Yuan; Est. 815b Yuan
  • New yuan loans forecast range 600b yuan to 1.8t yuan from 30 economists
  • April aggregate financing 1.39t yuan; est. 1.15t yuan (range 800b yuan to 1.8t yuan, 25 economists). March 2.12t yuan
  • April M2 +10.5% y/y; est. +10.8% (range +10.4% to +11.8%, 31 economists). March +10.6%

So the credit part of that is probably a good thing. The RMB loans beat shows credit to the real economy is still getting extended and if you do the math here, it looks like the shadow banking component of TSF was down sharply from March, suggesting the PBoC’s efforts are bearing fruit even if a nasty knock-on effect has been the collapse across the metals complex.

ChinaTSF

The M2 component is a little more concerning though because a decline in growth there could feed through to PMIs:

PMIChinaM2

So that’s probably the most notable thing we got overnight.

Meanwhile, the dollar is on track for its best week this year ahead of CPI and retail sales data. The greenback has gained against G-10 peers after payroll data and producer prices beat estimates. “Sentiment for the dollar has turned brighter and it is gaining more support on dips since the start of the week,” Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo told Bloomberg on Friday, adding that “in the longer run, the dollar is expected test its upside due to the growing likelihood of another Fed rate hike. USDJPY is up roughly 0.9% this week, set for its fourth weekly gain, which would be the longest stretch this year.

Dollar

We also got German GDP data which met estimates. Here’s the quick take:

  • German Economy Expands 0.6% Q/q in 1Q; Est. Expands 0.6% Q/q
  • Forecast range 0.4% to 0.8% q/q from 46 economists
  • Workday adjusted GDP rose 1.7% y/y; est. rose 1.7% y/y
  • Unadjusted GDP rose 2.9% y/y; est. rose 2.8% y/y
  • GDP rose annualized 2.4% in 1Q: Bloomberg calculation

GermanyGDP

“Confidence in the stability of the recovery is enormous,” said Jens Kramer, an economist at NordLB in Hanover. In Germany, “economic momentum is extremely robust and very broadly based. The steady increase in employment is fertile soil for domestic demand, and trade is providing impulses as well.”

Tell us what you really think, Jens.

In any event, Asian shares were mixed, while their European counterparts inch higher:

  • Nikkei down 0.4% to 19,883.90
  • Topix down 0.4% to 1,580.71
  • Hang Seng Index up 0.1% to 25,156.34
  • Shanghai Composite up 0.7% to 3,083.51
  • Sensex down 0.3% to 30,161.49
  • Australia S&P/ASX 200 down 0.7% to 5,836.90
  • Kospi down 0.5% to 2,286.02
  • FTSE 7398.04 11.41 0.15%
  • DAX 12730.06 19.00 0.15%
  • CAC 5386.14 2.72 0.05%
  • IBEX 35 10865.10 3.70 0.03%

Lots of important econ today. Here’s the docket:

  • 8:30am: US CPI MoM, est. 0.2%, prior -0.3%
  • 8:30am: US CPI Ex Food and Energy MoM, est. 0.2%, prior -0.1%
  • 8:30am: US CPI YoY, est. 2.3%, prior 2.4%
  • 8:30am: US CPI Ex Food and Energy YoY, est. 2.0%, prior 2.0%
  • 8:30am: US CPI Core Index SA, prior 251
  • 8:30am: US CPI Index NSA, est. 244.6, prior 243.8
  • 8:30am: Real Avg Weekly Earnings YoY, prior -0.01%
  • 8:30am: Real Avg Hourly Earning YoY, prior 0.3%
  • 8:30am: Retail Sales Advance MoM, est. 0.6%, prior -0.2%
  • 8:30am: Retail Sales Ex Auto MoM, est. 0.5%, prior 0.0%
  • 8:30am: Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.1%
  • 8:30am: Retail Sales Control Group, est. 0.4%, prior 0.5%
  • 10am: U. of Mich. Sentiment, est. 97, prior 97
  • 10am: U. of Mich. Current Conditions, prior 112.7
  • 10am: U. of Mich. Expectations, prior 87
  • 10am: U. of Mich. 1 Yr Inflation, prior 2.5%
  • 10am: U. of Mich. 5-10 Yr Inflation, prior 2.4%
  • 10am: Business Inventories, est. 0.1%, prior 0.3%

 

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