Pre opening to the Shanghai index opening overnight, China’s April Leading Economic Index was revised to a lower than expected 145 vs the initial reading of 147.1 in mid June as the preliminary reading had an error in its calculation. The report is still up from 144.6 in March and it’s a new high in this cycle but the hint of moderation is what alarmed markets as it comes in the context of fragile US and European economies at the time we look to Asia as the global economic savior. The Shanghai index fell by 4.3% to a new 14 month low. Commodity prices are also lower in response, the 10 yr US Treasury is below 3% for the 1st time since Apr ’09 and the 2 yr yield is at a record low. With just 2 days before the ECB 12 month liquidity facility expires, 3 month Euribor rose for a 22nd straight day and including flat days, hasn’t fallen since Apr 20th. To all of the above, end of quarter is likely an influence in exaggerating the moves.
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