1 hour ago | December 18th, 2014 03:07:47 GMT.

China to purge foreign technology from banks, military, state-owned enterprises, key government agencies by 2020


An item from Bloomberg which says “China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020, stepping up efforts to shift to Chinese suppliers, according to people familiar with the effort”

  • The plan for changes in four segments of the economy is driven by national security concerns
  • Foreign suppliers may be able to avoid replacement if they share their core technology or give China’s security inspectors access to their products, the people said.

More at the ungated article


1 hour ago | December 18th, 2014 02:29:30 GMT.

The Federal Reserve needs to learn from its mistakes & not tighten too soon


An interesting piece from Bloomberg in which they discuss five ways traders have been telling the Fed that they should postpone their tightening strategy:

1. Inflation expectations have fallen close to where they were right before the Fed embarked on QE2

2. U.S. corporate borrowing costs are skyrocketing, especially for the riskiest debtors … capital spending at these companies is certainly not going to be what it has been

3. Bloodbath in commodity prices … if it continues, that’ll further drag down those inflation expectations and the need for the Fed to tighten monetary policy

4. Market stress is on the rise… a worsening selloff may not be the best time to raise interest rates

5. Traders disagree with the Fed’s forecast that benchmark interest rates will approach 4 percent in the longer run. The bond market is pricing in shorter-term rates of about 2.66 percent, based on a one-year interest-rate swap traded five years forward — see chart. The market is telling U.S. central bankers they should reconsider their plans.

The article is ungated and raises good point


2 hours ago | December 18th, 2014 01:52:11 GMT.

Yuan still falling


Offshore yuan (CNH) has fallen to its weakest since July 2014

USD/CNH showing around 6.2046

This morning the PBOC set USD/CNY at 6.1195, while the prior close was 6.1975 – its showing around 6.2032



2 hours ago | December 18th, 2014 01:30:27 GMT.

China house prices: -3.7% y/y (prior -2.6% y/y) – via Reuters


China house prices:

  • All China November new home prices -3.7% y/y (prior -2.6% y/y) – via Reuters calculation
  • November Beijing new home prices -2.1% y/y (prior -1.3%)
  • November Shanghai new home prices -2.9% y/y (prior -2.0%)
  • November new home prices fall y/y in 68 cities out of 69; (prior 67)

From FastFT:

  • Annual prices had been rising as much as 9.6 per cent at the start of this year
  • Cooled since as the economy slows and many mid-sized Chinese cities suffer from a glut of apartments
  • Investors shift focus from the property market into equities


3 hours ago | December 18th, 2014 00:40:16 GMT.

China shows stabilisation in fourth quarter, but investment sliding: business survey


I had some headlines from the China Beige book here: China Beige Book – Economy stabilized in Q4

More now from Reuters:

  • China’s economy showed mild signs of stabilisation in the fourth quarter
  • Corporates remained cautious on investment
  • “While the rebound is certainly not an impressive one, sales, profits, and employment have all improved a bit during the second half of the year”


  • Wage and job growth remained stable
  • Export orders picked up, helping to offset weak internal demand
  • “Still, Q4’s improvement defies Beijing’s claims of rebalancing toward stronger consumption”

More at the article


3 hours ago | December 18th, 2014 00:19:01 GMT.

AUD/USD & NZD/USD orders


The gyrations post FOMC & Yellen have cleaned out the boards … here’s what’s left


  • Sellers …. some around 0.8135 and 0.8160 but size is not large
  • Buyers 0.8100/05, stops below 00

Currently 0.8122


  • Sellers 0.7150 – again size is not large
  • Buyers 0.7680/85 then 0.7650/60

Currently 0.7693


4 hours ago | December 17th, 2014 23:54:58 GMT.

Reuters poll – 13 of 19 US primary dealers see Federal Reserve raising Fed Funds rate by June 2015


Reuters poll

  • 13 of 19 US primary dealers see Federal Reserve raising Fed Funds rate by June 2015
  • 16 see the Federal Reserve raising rates at least twice in 2015
  • Median fed funds target among primary dealers is 1 pct at end of 2015, 2.5 pct at end of 2016


  • One is forecasting a hike as early as April
  • All but two expect at least one rate hike in 2015
  • 10 are predicting three hikes
  • 19 of the 22 primary dealers participated in the latest Reuters survey



4 hours ago | December 17th, 2014 23:50:14 GMT.

Japan Buying Foreign Bonds, Y -610.3B (plus the rest of this data)


International Transactions in Securities data from Japan’s Ministry of Finance,for the week ended December 12

  • Japan Buying Foreign Bonds, Y -610.3B (the negative result means net selling)
  • Japan Buying Foreign Stocks, Y 126.7B
  • Foreign Buying Japan Bonds, Y 319.6B
  • Foreign Buying Japan Stocks, Y 120.4B

Ah …. ****

I’ve just realised the next lot of this data is due out in 7 days, on December 25.

I might have to chuck a sickie.


4 hours ago | December 17th, 2014 23:31:24 GMT.

WSJ reports China is “said” to be open to a more flexible yuan


There is a headline crossing the wires that

  • China said to be open to a more flexible yuan, WSJ reports

Well, yeah … but you might be asking “Say’s who?”

Larry Hu, China economist at Macquarie Group

  • “Yuan is facing downward pressure given the strength of the dollar
  • “Meanwhile, China’s central bank is trying to let the market play a more important role in setting yuan’s value”

More at the article (not gated, so you can read the whole thing free)

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