Today, China announced a surprise trade surplus of $5.35B vse. -$3.15B. The rumor of this positive number initially drove risk higher with the EUR/JPY rallying, equities rallying and bond yields going up. However when the numbers were released, the details were troubling as exports rose 8.9% vse. 7.0% and imports were up 5.3% vse. 9.0%. This means that China is struggling to transition from an export driven economy to a consumer driven economy. Clearly, this switch will take time and will mean that China will not be ready to provide an engine of import growth to the rest of the … …READ MORE

The monthly Chinese CPI data came out today and was hotter than expected. This data is critical as it influences decisions on both the regulatory and monetary policy level for the Chinese economy. The National Bureau of Statistics said that the consumer price index increased 3.6% y/y in March which was above the 3.3% expected. Food costs rose 7.5% and generated 1.9% of the 3.6% rise overall in the CPI. This data could mean that the Chinese will hold back from cutting bank reserve requirements this month as caution is exercised over igniting a rapid rebound with inflation.

In a … …READ MORE

Here are the highlights from the press conference according to Reuters.

ECONOMIC OUTLOOK
“Downside risks to the economic outlook prevail.”
“Survey indicators for economic growth have broadly stabilized at low levels in the early months of 2012 and a moderate recovery in activity is expected in the course of the year.”

ECB MEASURES HELPED IMPROVE STABILITY
“(Standard and non-standard measures) have contributed to the stabilization in the financial environment and to an improvement in the transmission of monetary policy.”

INFLATION
“The information that has become available since the beginning of March broadly confirms our previous assessment. Inflation rates are likely … …READ MORE

There are numerous articles around focused on the resurgent U.S. economy and the potential for a positive, self-reinforcing cycle of growth, employment and more growth. As we will receive the latest on the US employment situation on Friday, the pulse check will be interesting to see if the heart of the economy beats as strongly as these optimistic articles portend. My view remains that the goal of the US Federal Reserve is to achieve economic growth via extraordinary soft monetary policy and they will continue this policy until they truly believe the crux of the aforementioned articles…….

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This week has been marked by Federal Reserve chairman Ben Bernanke appearing in multi-media outlets discussing the US economy and what the central bank can do to assist it. Here’s the key exchange (full transcript here)

DIANE SAWYER: Turning to the economy today, what is the word you would give American viewers, Americans out in the country about the economy now? Are we in a recovery? Is it sustainable? How strong is this recovery?
CHAIRMAN BERNANKE: Well, we are in a recovery. The economy’s been growing– for almost three years. And we’ve had some good news lately. We’ve– … …READ MORE