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12 Jul 2013
Flash: China trade data disappoints - BBH
FXstreet.com (London) - Brown Brothers Harriman analysts note that recent China trade data for June was much weaker than expected.
They highlight that exports fell 3.1% in May on a y/y basis. and is the first outright decline in over a year and the largest drop since October 2009. They note that the consensus expected a 3.7% increase. Further, imports slipped 0.7% while the consensus expected a 6.0% rise, and the net result was a $27.1 bln surplus after a $20.4 bln surplus in May.
They add that the news spurred some speculation that the PBOC may consider a cut in the required reserves, which is a type of monetary easing. China Q2 GDP is due out July 15, and they think there are downside risks to the consensus 7.6% y/y vs. 7.7% y/y in Q1. They write, “CNY has traded largely sideways since mid-May, and we believe that will continue in Q3. It’s worth noting the 5th US-China Strategic and Economic Dialogue takes place July 10/11 in Washington DC. It is the first to have Secretary of State Kerry and Secretary of Treasury Lew attending in their new posts.”
They highlight that exports fell 3.1% in May on a y/y basis. and is the first outright decline in over a year and the largest drop since October 2009. They note that the consensus expected a 3.7% increase. Further, imports slipped 0.7% while the consensus expected a 6.0% rise, and the net result was a $27.1 bln surplus after a $20.4 bln surplus in May.
They add that the news spurred some speculation that the PBOC may consider a cut in the required reserves, which is a type of monetary easing. China Q2 GDP is due out July 15, and they think there are downside risks to the consensus 7.6% y/y vs. 7.7% y/y in Q1. They write, “CNY has traded largely sideways since mid-May, and we believe that will continue in Q3. It’s worth noting the 5th US-China Strategic and Economic Dialogue takes place July 10/11 in Washington DC. It is the first to have Secretary of State Kerry and Secretary of Treasury Lew attending in their new posts.”