Week End Blog – Deflation?, China and Jobs

Just 0.5%. That is the latest inflation level in the Eurozone. But, as temporary factors are believed to have pushed down the inflation rate, the ECB has not taken any action at its policy meeting on Thursday. They did discuss QE though, and a lot more…

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This week was PMI week again. Only non-euro core countries managed to lift their PMI levels. In the US the PMI was unchanged, while Asia remains the weak spot with China’s HSBC PMI falling to only 48.0.

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The official China PMI went up a touch, but even that can hardly be interpreted as a positive sign. Historically, March and April have seen strong increases in the PMI level as the country awakes from Chinese New Year. The 0.1 point rise in the PMI this March is very subdued.

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More negative news from China. Profit margins are falling and so are stocks.

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April has commenced this week. What does April bring for investors? This week I wrote an article on seekingalpha.com looking into the friendliness of April for stock markets. It turns out April is pretty investor friendly. It ranks among the highest average returns and also experiences a relative low number of negative months.

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This week there was an interesting observation within the fixed income markets. After years of uncertainty about the European peripheral debt piles the yield on Spanish five-year bonds went below the yield on US five-year Treasuries. Who would have thought this only 18 months ago?

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Finally, on Friday we had US jobs data. And, while the nonfarms came in just shy of expectations, and the previous nonfarm numbers were revised upwards, the number sent interest rates down quite a bit. Still, after six years the US has finally managed to get the number of jobs back it lost during the financial crisis.

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