Thursday, March 31, 2016

OVERNIGHT


The WSJ reported overnight that China factory output picked up,of one can believe the numbers, a fact that might make the Yellen-led Fed cheerier.

Two key gauges of Chinese factory output registered a pickup in March on signs that policies aimed at boosting growth were having some impact.

China’s official manufacturing purchasing managers index increased to 50.2 last month month from 49.0 in February, according to the National Bureau of Statistics. This is the first time in eight months the figure has been at or above 50, the level dividing expansion from contraction. A separate indicator, the private Caixin manufacturing PMI, rose to 49.7 in March from 48.0 in February. The statistics agency also said the official nonmanufacturing PMI rose to 53.8 in March from 52.7 in February.

Economists said optimism in March among manufacturers was boosted by greater stability in the yuan after a volatile start to 2016, a boost in Chinese stock markets and signaling at China’s annual legislative session earlier in the month that growth will remain a priority.
Policy pronouncements included a higher target for the nation’s fiscal deficit this year, set at 3% of gross domestic product compared with last year’s 2.3%. And China cut required bank reserves in late February by 0.5 percentage point to 17%, releasing an estimated $108 billion into the financial system.

But the Nikkei dropped to a one-month low as further dollar weakness against the yen didn't help investor mood. Down nearly 3% to 16,271.86 in morning trading, after coming off a low of 16,262.68, the volatility index shot up 18% to 26.86, the highest since March 15, Reuters reported.


A BOJ survey released also added  to concerns: Traders said the survey outcome heightened calls for more stimulus but that the Bank Of Japan is running out of ammunition amid concerns about the stronger yen's impact on exporters' earnings. The bad news on corporate sentiment from the domestic market accelerated investors' risk-aversion, which is already driven by a slowdown in the Chinese economy and the prospect of U.S. rate hikes.

The dollar is down 6% against the yen for the first quarter and fell 0.4% in trading this morning to 112.09. Worries about the effectiveness of "Abenomics" continue as investors exect more stimulus.



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