10 Jun 2013
Flash: Evidence of Chinese deflation surfacing? – Deutsche Bank
FXstreet.com (New York) - It's difficult for the Fed to act in a vacuum and this weekend's Chinese data was interesting and generally weaker-than-expected.
According to Macro Strategy Analysts J. Reid and C. and C. Tan at Deutsche Bank, “If China is slowing it is possible that the Fed may have to do more heavy lifting than they would like.” In terms of the weekend data, Chinese exports in May only grew 1% YoY versus consensus of 7.4% and down sharply from the controversial +14.7% reading in April which was reportedly driven up by artificial invoicing.
Indeed, Deutsche Bank Analyst, Jun Ma believes that this sharp deceleration reflects largely the impact of the government crackdown on hot money inflows via fake trade activities, and the underlying export growth, after adjusting for the base effect, remains steady at around 8-9% YoY in May. Imports also shrank 0.3% in May versus a year ago, whilst the market was expecting a +6.6% increase. Some disinflationary pressure was also evident in China.
According to Macro Strategy Analysts J. Reid and C. and C. Tan at Deutsche Bank, “If China is slowing it is possible that the Fed may have to do more heavy lifting than they would like.” In terms of the weekend data, Chinese exports in May only grew 1% YoY versus consensus of 7.4% and down sharply from the controversial +14.7% reading in April which was reportedly driven up by artificial invoicing.
Indeed, Deutsche Bank Analyst, Jun Ma believes that this sharp deceleration reflects largely the impact of the government crackdown on hot money inflows via fake trade activities, and the underlying export growth, after adjusting for the base effect, remains steady at around 8-9% YoY in May. Imports also shrank 0.3% in May versus a year ago, whilst the market was expecting a +6.6% increase. Some disinflationary pressure was also evident in China.