IS CHINA EXPORTING DEFLATION? (0651 GMT)
Factory-gate prices stopped falling in China last month, but
did not rise and in annual terms remain negative - a welcome
piece of news on Thursday for Western central bankers who are
starting to run into difficulty in heading off sticky inflation.
Relief wasn't immediate, as the figures were tinged by
doubt on the robustness of China's consumption rebound, with
inflation in the country also at its slowest in a year.
But with several months' data now published since the end of
China's restrictive zero-COVID-19 stance, there's some weight
behind analysts' contention that the reopening of the world's
second-biggest economy won't set off a new inflationary pulse.
Unemployment and the lack of stimulus handouts are widely
expected to keep the temperature of local demand in check, while
a global slowdown is also likely to cool price pressure on
exports.
That's likely welcomed since analysts are making their
latest upward revisions to U.S. and European interest rate
expectations and do not need another inflationary shock from
China's reopening.
European futures steadied in Asia as markets
assumed a holding pattern with the focus on U.S. data as the
driver of interest rate movement.
As some of the dust settles on U.S. Federal Reserve Chairman
Jerome Powell's hawkish testimony at Congress, Fed funds futures steadied, perhaps a signal economists - who have been
jacking interest rate forecasts toward a peak near 5.75% or 6% -
may finally have done enough. U.S. jobless claims data later on Thursday offers an entree
for a blockbuster jobs report on Friday that could make or break
market pricing for a 50-basis-point Fed hike later in March.
The Bank of Japan concludes a two-day meeting on Friday,
though it is increasingly dancing to its own beat.
A falling yen is among signs that efforts to deter
short-sellers in the bond market are working and speculation for
a policy shift at what will be Governor Haruhiko Kuroda's final
meeting in charge seems to have ebbed from earlier fever-pitch
levels.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%; Japanese stocks rose 0.6% on Thursday.
Key developments that could influence markets on Thursday:
Economics: U.S. jobless claims Speakers: Riksbank officials AinoBunge and Per Jansson, Bank of England's Sarah Breeden, Bank of Canada's Carolyn Rogers
(Tom Westbrook)
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