Inflation in China in Feb rose more than expected as CPI was up 2.7% y/o/y vs the consensus gain of 2.5%. It is the fastest gain since Oct ’08. Combining this with Feb loan growth 100b yuan above forecasts at 700b and expectations are rising that the PBOC will soon raise interest rates. The recent underperformance in the CRB index relative to the S&P rally is partially explained by this belief. Retail sales and IP ytd growth rates were about in line with forecasts. Asian stocks were mixed in response to the data but global bond markets are trading lower with yields higher. Ahead of today’s 30 yr auction, the US bond yield is at a 2 1/2 week high and in a still glacial pace and very low level, 3 month US$ LIBOR rose to a 3 month high. Australia Feb jobs report was weaker than expected but follows the big upside surprise in Jan. The BoKorea and RBNew Zealand both left rates unch as expected. US Claims data are key today.
