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13 Aug: The PBoC speaks

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The PBoC has collectively muttered "Oh, Good Grief!" at the markets. We had a statement that the PBoC would respect the market "while allowing the government to play its role", that the RMB was a strong currency, that the correction was largely accomplished, etc.
  • What matters economically is whether Chinese exporters pass on the move (increase market share) or not (increase profit share). They have not passed on the effects of other currency moves this year. We do get US import and export prices (the interesting issue is relative import prices – compared to PPI by sector).
  • The world economy is led by the US, and the US is led by the unremitting hedonism of the US consumer. We have the US retail sales figures. The monthly data has been noisy, but with wages and employment rising notably in the retail sector, we have to suppose there is some trend strength in demand.
  • The Euro area has some final consumer price inflation figures, which are not likely to be a major focus for financial markets (as final figures). It is worth noting, in passing, that in spite of recent falls the CRB commodity price index is above the average for last year in Euro terms.