Business

Following a series of better than expected GDP-feeding prints, consensus had expected Q4 GDP to tick higher in the first revision released today, rising from 1.9% to 2.1%. However, that did not happen and instead, the revised print came in unchanged at 1.9%. Notable underlying revisions include: an upward revision in consumer spending, both in services and goods; a downward revision to business investment, mostly in intellectual property products and equipment; and a downward revision to state and local government spending, primarily in structures.

On the heels of a disappointing revised Q4 GDP print, the US trade balance for January printed a $69.2 billion deficit. This is the second largest deficit since August 2008 (slightly smaller than the March 2015 plunge) as the dollar surge has not helped.

The biggest driver the deficit increase was  4.8% MoM increase in Consumer Goods (notably Auto exports rose 9.3%)

The $69.2bn deficit is considerably worse than the $66.0 billion expectations, and is lower than the lowest analyst expectation.

For a majority of China watchers, while Beijing's goalseeked GDP reports are largely dismissed as politburo propaganda, most of the attention falls on the PBOC and banking sector's credit creation, and particularly, how this translates into broad money supply, or M2, growth: after all, in a nation which has roughly $35 trillion in bank assets, the biggest variable is how much cash is being injected into the system, and what happens with said cash.

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By Vincent Cignarella, an FX strategist who writes for Bloomberg.

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