For now, fears of a sharper than expected slowdown in Chinese growth, in response to policy steps to cool their property markets, was calmed over the weekend after China reported better than expected Aug loan growth, retail sales, industrial production and fixed asset investment and while CPI rose 3.5%, the most since Oct ’08, it was in line with estimates. The Shanghai index railled to just shy of the highest level since May. The Yuan also in response is rallying to a record high vs the US$. The other story of the day is specificity with the Basel III timetable on compliance. The US wanted 5 yrs, the German’s wanted 10 and the uprights were split at 8 yrs and based on the rally in the European banking sector, most are happy with the compromise. The iTRAXX European financial 5 yr CDS is tighter by 8 bps to 122 bps, a one month low and sovereign CDS is also narrower. The 200 day MA in the SPX cash of 1115 is the key technical viewpoint today.

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