Yesterday, not many cared about the weak economic data in China (retail sales and IP) but today they do and it highlights the daily tug of war between the reality of a challenging economic environment on one hand and the hopes and wishes that central bankers can save the day on the other. Chinese exports in July rose just 1%, well below expectations of a gain of 8% and down from 11.3% growth in June. Exports specifically to the EU, China’s largest trading partner, fell 16.2% y/o/y. Imports, a major feedstock for Chinese exports, were up 4.7% vs the estimate of up 7% (up from 5.3% from the EU). Also, new yuan loans totaled 540.1b, 160b yuan below forecasts and the slowest monthly gain since Sept ’11. The Shanghai index fell modestly after 5 straight days of gains. In Europe, July CPI in Germany slowed to 1.9% y/o/y, the lowest rate of change since Dec ’10. French IP in June was flat m/o/m, a touch below estimates of a gain of .1%.
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