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Strength versus softness

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  • Chinese data showed reasonable economic strength, but focused more on the export sector than has been the case in the recent past. This would fit with the evidence of a good start to Q4 economic activity in the United States.
  • Japanese bank lending rose at a steady 2% yoy rate in October. The data, however, does include recent strength in bank lending to local government, and bank lending overseas (directly and indirectly). Lending that generates domestic consumption is what is needed.
  • With the US marking Veterans' Day, the aftermath of the data from last week is likely to continue to guide markets. The employment report revisions were particularly substantial, adding to the momentum of the labour market and encouraging economists to expect tapering in December or January.
  • The Euro area has German inflation numbers, with final consumer prices seen some way below the target rate, and wholesale prices still falling. Of course, in terms of deflation risk Germany is likely to fare better than many of its peers in the Euro area.

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