On a day when the most interesting development is allowing Hong Kong residents or account holders to freely convert HK$ to RMB after the Stock Connect goes live, you know that not too much happens. Bloomberg learned a little bit more about momentum as it applies to the yen but that was pretty much it.
I’ve preoccupied myself with looking at what might come tomorrow instead, and that looks a lot more interesting:
- 08:30 JST / 23:30 GMT: Japan Reuters Tankan (manufacturing businesses) monthly confidence survey!
- 08:50 JST / 23:50 GMT: Japan Manufacturing Orders, Corporate Goods Prices and Capital Flows data.
- 13:30 JST / 04:30 GMT: Japan Industrial Production Revisions for Factory Operating Ratios and Industrial Output.
- 13:30 CST / 05.30 GMT: China Fixed Asset Investments, Industrial Production and Retail Sales.
- 18:00 CST / 10:00 GMT: China M2 Money Supply, New Loans and Outstanding Loan Growth data.
For my reflections and expectations on these news and potential directions it could bring trade, hit the jump!
With the US jobless claims numbers coming as usual on Thursdays it will be a pretty packed day for data! I look forwards to sitting glued to the screen for a while and looking at potential data movements throughout the day. For Japan, the Tankan business survey holds the most sway, and will probably be a decent weather wane for sentiment. This is the Reuters monthly Tankan however, not the BOJ quarterly so it’s not that big of a deal. The I-have-no-idea-how-many-zeroes-to-attach-to-this yen question is of course whether this data could be a hint at delaying the sales tax further, which Bloomberg seems to be championing at the moment. My worry is that this comes at the expense of lowering the corporate tax rates which could really skew the inflation mechanics away from payroll-driven inflation to goods-driven inflation. Give wage earners a head start on inflation! One great way to do that is to make it cheaper to hire people! The market reaction is likely to be largely influenced by any stimulus / tax hike trading, so “good is bad” in this case, I guess.
Manufacturing orders are probably the major data point out of the rest, since it drives a lot of sentiment. Not expecting goods prices or capital flows to be moving the market, but there is the massive possibility for inwards capital flows, given the great beat of expectations that Current Account Balance saw earlier this week, implying that more money flowed into Japan in October than anyone expected. Also, the BOJ/GPIF slam came on the very last day of the month! Revisions are revisions, so unless they messed up the preliminary data I don’t see a whole lot of reason to bench myself for the 13:30 JST slot. Good data for manufacturing orders will be market positive, showing that the current policies work. Capital flows could have a yen impact, but it’s likely to be completely swamped by November data anyway so I wouldn’t take position based on October results.
As for China, large GDP components are coming in, so this will be data to keep an eye on. Fixed asset investments are expected to increase at 15.9% on a YTD basis, and industrial production and retail sales are expected to have grown 8% and 11.6% on a YoY basis. My expectation would be that YoY data could be down relative the analysts surveyed, given the lower export and import numbers that came out this past weekend. Probably market positive, given the need to make the Shanghai – Hong Kong Stock Connect fly off the bat, so PBOC repo operations could be a result of bad data here.
Given the targeted easing that the PBOC has done and other liquidity-enhancing operations, I would expect M2 to be up, but the question is if this is reflected in loan growth values.