Crouching Tiger, Hidden Dragon Part II
The focus on China continues. China statistic bureau reported China economy grew 10.7%. Bloomberg story: China’s GDP Growth Accelerates to Fastest Since 2007. The market focused on what wasn’t told in the report. Apparently the press release was missing the references to keeping “moderately loose monetary policy” and a “proactive fiscal policy”. The intense to the developments was given by the recent move in Chinese treasury bills measurable in teen bps.
Another data point on which there was a lot of attention is that the four largest Chinese banks have lent additional $160 billion in first two weeks of the year.
Although worries on China tightening (intentional or not) are warranted and China slowdown would mean global slowdown I think the fears are premature. I think they have some monetary fire power left and China is certainly not a safeguard of transparency so they can hide eventual problems for a while.
In Europe the Greece problems are main story. As I already said, without EU help they will default and apparently EU is claiming they will not help. Off course, they are claiming that they don’t need help. Bloomberg story: Greece Won’t Need Rescue Package on Debt, Papaconstantinou Says. They are planing to issue a bond to Asian investors, a hard task…
Euro got pounded.
Chart 1. Euro Index
Source: StockCharts.com