Ranges are more realistic

Posted by: Paul Donovan

05 Mar 2019
  • China has set an official growth target of "6% to 6.5%", rather than last year's "about 6.5%". The media present this as a "cut". In truth, the range reflects the lack of precision of any economic data (investors are perhaps less than confident in the accuracy of Chinese official data anyway).
  • Chinese growth is running above its trend rate (of around 5%) on official numbers, and probably in reality as well. Guiding for slower growth is sensible. The government also announced some tax cuts today to smooth the move to lower growth.
  • Various central bankers crowd onto the agenda, but their remarks are unlikely to be new information for the markets. Bank of England Governor Carney speaks before next week's key parliamentary votes on separating the UK and the EU. The bank has signalled that rate cuts would be common sense in the event of a no-deal exit (the Bank of England using common sense might be considered new information). Various US Fed speakers are also due.
  • Eurozone retail sales are worth a glance, as the euro area consumer is an important foundation of growth this year. Assorted service sector sentiment surveys will get more attention than they merit.

Explore more CIO Daily Updates