18 April 2023
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Strong Q1 growth in China

By Daniel Richards

China’s GDP grew by a faster than expected 4.5% y/y in Q1, up from 2.9% in Q4 2022. The market had been looking for growth of 4%. Recovering consumer spending and increased government investment in infrastructure underpinned growth in the first quarter of 2023. Retail sales in March jumped 10.6% y/y while industrial production grew by a slower than forecast 3.9% y/y. Investment in fixed assets rose 5.1% y/y in March. Residential property sales rose 7.1% y/y in Q1, even as property investment declined. The unemployment rate fell to 5.3% in March from 5.6% in February.

In the US, the Empire Manufacturing Index, which measures business conditions in New York state, rose sharply in April to 10.8 (from -24.6 in March), the first positive reading in five months and much better than the market had been expecting. The survey indicated strong demand with new orders surging to a one-year high and shipments also rising sharply.  Encouragingly, the prices paid index fell indicating easing inflationary pressures. However, both employment and hours worked declined in April.

Today’s Economic Data and Events

  • 10:00 UK unemployment rate (3m to Feb) forecast 3.7%
  • 10:00 UK average weekly earnings (3m to Feb) forecast 5.1%
  • 13:00 GE ZEW survey (Apr) forecast 15.6
  • 16:30 US housing starts (Mar) forecast 1400k

Fixed Income

  • US Treasuries dropped at the start of the week thanks to some strong manufacturing data reported by the New York Fed. The 2yr UST yield pulled higher by almost 10bps to settle at 4.1942% while the 10yr UST yield added about 9bps to close at 3.6004%. Thomas Barkin, president of the Richmond Fed, said he wanted “more evidence” of inflation moving toward the Fed’s 2% target, sticking with Fed messaging that restrictive policy likely needs to remain in place for the year.
  • European bonds closed lower at the start of the trading week with bund yields up 3bps on the 10yr to 2.467% while the 10yr gilt yield added 3bps to 3.685%.
  • Taqa priced two bonds overnight. A USD 500m 5yr priced at +80 and a USD 1bn 10yr green priced at +110. Both came in tighter than initial guidance.
  • Fitch revised their ratings on several banks in Saudi Arabia after having raised the rating on Saudi Arabia to ‘A+’ earlier this month. The banks include Riyad Bank, The Saudi British Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, the Saudi Investment Bank, Bank Aljazira and Gulf International Bank – Saudi Arabia. All banks had their ratings raised to ‘A-‘ from ‘BBB+’.


  • The move higher in yields at the start of the week helped to push the dollar up against peers. EURUSD dropped by 0.6% overnight to 1.0926 while GBPUSD fell by 0.3% to 1.2376. USDJPY added 0.5% to 134.47.
  • Commodity currencies also weakened but held their ground a little better. USDCAD was limited to a 0.2% upward move to 1.3394 while AUDUSD fell less than 0.1% to 0.6701. NZDUSD was the relative underperformer, sinking by 0.4% to 0.6181.


  • There were late gains for US equity indices yesterday, with all three benchmark indices closing 0.3% higher at the end of the session, with positive earnings still driving sentiment.
  • The mood was somewhat less sanguine earlier in the day in Europe, where the DAX and the CAC dropped 0.1% and 0.3% respectively while the composite STOXX 600 ended flat. In the UK, the FTSE 100 eked out a 0.1% gain to clock its seventh daily gain in a row, an achievement last realised in December 2020.
  • Locally, the ADX added 0.2% and the DFM 0.6%. The Tadawul gained 1.2% and the EGX30 5.6%.


  • Oil prices dropped in the first day of trading this week. Brent futures fell 1.8% to USD 84.76/b while WTI dropped more than 2% at USD 80.83/ and Murban futures fell 1.9% to close at USD 85.46/b. Fundamentals from the oil market are relatively quiet at the moment though weakening prices for fuels like gasoil are eroding some confidence at the margins.
  • Gold prices closed below the USD 2,000/troy oz for the first time in about a week overnight with the metal down about 0.5% to USD 1,995/troy oz. Silver prices fell 1.2% while aluminium and copper both edged lower.


Written By

Daniel Richards Senior Economist

Edward Bell Head of Market Economics

Khatija Haque Head of Research & Chief Economist

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