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April 10, 2013

By Global Economic Team|

Strategy and Economics: China Macro - The Roadmap for Policy and for Markets. We believe China is on track for a growth recovery this year, but uncertainty from policy tightening could potentially tip the risks to the downside. In this note, we explore the policy outcome this year and its implications for equity and credit markets, as well as the banking and property sector. Helen H Qiao.

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BoJ Watch: Black and White: Content and Implications of the April 3-4 Meeting BoJ's April 3-4 policy meeting will likely mark a key change. We expect more quantitative easing, such as increased purchases of JGBs with longer remaining maturities, or integration of APP and Rinbans. Takeshi Yamaguchi.

U.S. Economics: Manufacturing ISM Much softer than expected report, with the composite index falling 3 points to 51.3 after a 4-point jump to 54.2 over the prior two months. A strong result for export orders indicates that the inflection in global trade continues to provide support, but domestic fiscal policy drag is an offsetting negative in the near-term, keeping factory output muted for now. Ted Wieseman.

Strategy and Economics: Will Ukraine Close the Deal? We still expect a 1H13 deal. IMF representatives are in Kiev again to discuss a Stand-By Agreement (SBA). We expect the Ukrainian authorities to agree to an SBA in 1H13 to tackle their imbalances and move to a more flexible UAH (see EM Profile: Ukraine: Stand By for the Stand-By, January 28, 2013). Jacob R Nell. 

China Economics: Seasonally adjusted PMI dampen optimism on growth China's Official PMI strengthened to 50.9 in March from 50.1 in February: That reversed the decline in the previous two months, but fell short of our forecast of 51.5 and consensus of 51.2. The latest change was much smaller than the average gain of 2.8ppts in March since the PMI series began in 2005. Helen H Qiao.

US Macro Dashboard: Data this week were mixed, though the market mover was a downturn in the Conference Board consumer confidence figure. While reports about current conditions held steady, expectations for job growth and business conditions tumbled. Vincent Reinhart.

 Japan Economics: Black Cloud Over Abenomics: Court Rulings: Several regional courts have ruled results from the December 2012 election to have been unconstitutional, and some have even ruled the results invalid. Robert Alan Feldman, Ph.D.

 India Quick Comment: Current Account Deficit Widened to All-time High in QE Dec-12. Current account deficit widened to all-time high in QE Dec-12: The current account deficit widened to a record time high of US$32.6bn (6.7% of GDP, annualized) in QE-Dec 12 from US$22.6bn (5.4% of GDP, annualized) in QE Sep-12. The deficit in Sep-12 quarter was higher than market expectations (as per Bloomberg survey) of US$30.7bn and our expectations of US$27.5-28.5bn. The higher-than-expected number was primarily due to lower remittances and services exports growth. Current account deficit tends to be seasonally higher in QE Sep and Dec. Upasana Chachra.

 U.S. Economics: GDP Revision: Fourth quarter GDP growth was revised up less than expected to +0.4% from +0.1% in the second release and the -0.1% advance estimate. There was a second substantial upward revision to business investment in structures (+16.7% v. +5.8% and -1.1.% in the initial release), in line with the monthly construction spending figures, but this was partly offset by lower consumption (+1.8% v. +2.1%), as BEA incorporated figures from the Census Bureau's quarterly services survey, and a smaller than expected upward revision to inventories (-1.52pp contribution v. -1.55pp). Ted Wieseman.



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