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
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
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
The RBA Bulletin for Q4 has been published now.
Chock full of research papers if you are after something to read over the break.
December Quarter 2014
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
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
- Sellers 0.7150 – again size is not large
- Buyers 0.7680/85 then 0.7650/60
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.
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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