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China inflation blows ahead of whisper

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For the last couple of months, the whisper numbers ahead of Chinese CPI releases were dead on. This time, not so much. We expected 4.0% inflation in China based on all the news that was flowing through from Beijing. It seemed like a logical number -- and lately the whispers have been as reliable as outright leaks. But this time around, inflation actually came in at 4.8% on an annualized basis, overshooting the whisper by a mile. That tells me that we all need to reassess our expectations on China. Beijing may not be able to slow down the tightening process for a little while yet. Folks had already been wondering whether rates have gone too far, but given these numbers, there seems to be at least a bit of room left to go. Once again, look at food prices: up 11% on an annualized basis. This is why Beijing needs to take action. If inflation continues like this, the Chinese people are going to need help putting food on the table. If not for Japan's sad news, this would probably have been the excuse traders use to send the markets lower today. It is not especially good for China and reveals that the rosy "Goldilocks" view may be wearing thin. Not great for funds like FXI ( quote ) but ultimately a positive for the yuan ( quote ), one way or another -- you can trade that side of the story via funds like CYB ( quote ).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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