The Asian market response to the unexpected timing of the PBOC rate hike was mixed and interestingly, the Shanghai index closed a touch higher, up for a 9th trading day in the past 10 and the Yuan fell (China may be less inclined to accommodate a Yuan rise of substance if they’re raising rates at the same time). While Hong Kong, Australia and Japan sold off, Taiwan and South Korea rallied. Goldilocks is the hope for China and ahead of a possible 3.5%+ y/o/y CPI print tonight, they did the right thing. Remember, the annual per capita income of China is just $6,800 so inflation is much more of a bite there than it is in the more developed world.
Even with historically low mortgage rates, the MBA said purchases for the week ended Friday fell 6.7%, down for a 2nd week and lower by 14.6% over this time frame. It’s at a two month low and just 4% off the lowest since 1996. After a sharp 21% jump last week, refi’s dropped 11.2%. ABC confidence fell 1 pt to -46 and puts it right in line with the 12 month average but the State of the Economy component matched the lowest level since Dec ’09. II: Bulls 45.1 v 47.2 Bears 22 v 24.7 with the balance being those expecting a correction.