Business

Is China's push to deleverage its financial system over?

Industrial Production rose 0.96% in April - the biggest MoM move since Feb 2014 - dramatically better than expected (and one of the first 'hard' data beats this month). Year-over-year, IP is up over 2% (the fastest growth since Jan 2015).

The increase in durables was spearheaded by a large advance for motor vehicles and parts, while the improvement for nondurables was led by gains for food, beverage, and tobacco products, for textile and product mills, for printing and support, and for chemicals.

Following disappointing CPI prints for two months in a row, even such stalwart believers in the Fed's tightening cycle as Goldman Sachs (recall Hatzius warned recently that the Fed may need to "shock" markets to tighten monetary conditions in light of the S&P relentless grind higher despite rising rates) are suggesting that the Fed's rate hike trajectory for the rest of 2017 is suddenly in question.

China has suspended trading in its bond market for at least one Ministry of Finance-issued bond suffered "abnormal fluctuations" in the last two trading days.

The MOF 2021s dumped and pumped by almost 10 points in the last two days (and at the same time 5Y China bond futures rallied and fell notably...

The Shanghai Stock Exchange has suspended trading of the bond (Number 019535):

In his latest budget proposal, California Governor Jerry Brown, who continues to vehemently pursue various multi-billion dollar pet projects like the high-speed rail and the so-called "Delta Water Fix" despite his state teetering on the brink of insolvency, has finally admitted that CalPERS, California's public pension system, is a total disaster.