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China's demand shock persists

Chris Scicluna
Emily Nicol
  • China’s April economic activity data highlighted that the demand shock from Covid-19 is harder to shake off than the hit to the supply-side. Japan’s producer price data added to the evidence that the crisis has renewed deflationary risks.

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UK GDP drops most since the GFC

Chris Scicluna
Emily Nicol
  • Ahead of Jay Powell’s PIIE webinar, risk appetite is in shorter supply after yesterday’s words of caution from various Fed speakers and Dr Fauci and this morning’s UK GDP data which reported a particularly precipitous fall in output in March.

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PBC, ECB & Eurogroup support risk appetite

Chris Scicluna
Emily Nicol
  • A positive start to the week for Asian stocks benefited from the PBoC’s promise of more powerful policies to come, the ECB’s commitment to limiting spreads, and the Eurogroup’s agreement of a favourable design to its new Pandemic Crisis Support facility.  

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More BoE QE on its way soon

Emily Nicol
Chris Scicluna
  • While the MPC left policy unchanged this morning, its analysis made clear that the next move in policy is likely to be an increase in BoE QE, probably as soon as next month.

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ECB ignores German judges’ demands

Emily Nicol
Chris Scicluna
  • Despite a record drop in German factory orders (see below), euro area government bonds opened slightly lower, with BTPs the exception, after the ECB’s Governing Council appeared yesterday to pour cold water on the German Constitutional Court’s highly controversial ruling.

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