Morning Update – 14/03/16 – by Arjun Lakhanpal

Morning all.. Wall St had a solid close Friday with the S&P up 1.6% and Asia also nudged higher with the Nikkei up 1.74% HK up 0.8% and China up 1.5% at present. WTI is slightly lower and US 10yr yields about unchanged. Gold a little higher. Central banks dominated the week last week and will be the same this week too as this week it’s over to the BoJ (tomorrow) and the Fed (Wednesday). While the BoJ will likely take pause for breath after the controversial decision to move into negative rate territory last meeting, Kuroda’s press conference will be widely anticipated. As will Yellen’s after the FOMC will almost certainly stay put. Financial conditions have eased since the last meeting so we would expect the Fed to retain optionality to hike in June whilst acknowledging the fragilities around. Data dependency will likely be the key theme. Overall we still think 2017 will be more of a challenge for the economy and central bankers than in 2016 where inflation is still low enough for the plates to be spun a little more. The Fed is going to be interesting and some starting to suggest they may be more upbeat.. This of course could see the dollar rise but at present the EUR strength is holding although Asia was very quiet in FX. China data is proving difficult for analysts to get their head round following a mixed set of releases over the weekend. The negative side of things saw both retail sales (down five-tenths to 10.2% yoy; vs. 11.0% expected) and industrial production (down seven-tenths to 5.4% yoy; vs. 5.6% expected) fall in February relative to the prior month, while growth of funds available for fixed asset investment was also noted as slowing. On the flip side the big surprise was a rebound in fixed asset investment, driven by the rise of property investment. Today we get very little data but we do have EU Industrial Production data.. Good luck..