Sterling has been blasted lower after BoE governor Carney cast doubt on a previously pretty-much-expected UK May rate hike. The EU's rejection of Britain's latest Brexit-Irish border plan only served to deepen the rot.
Article / 24 June 2013 at 5:09 GMT

3 Numbers to Watch: German IFO, China Shibor, US Fed speech

Blogger / MoreLiver's Daily

Monday’s calendar does not have much new macro data, with the German Ifo business climate index being the only important release. I'm therefore taking the opportunity to discuss two important market drivers at the moment—China Shibor interbank interest rates and a speech by US Federal Reserve board member Richard W. Fisher. In other events, Italy's former prime minister, Silvio Berlusconi, gets a verdict today in a prostitution trial which could have an impact on the Italian bond market.

Germany June IFO Business Climate (08:00 GMT): The business climate is expected to show a reading of 105.9, almost unchanged from 105.7 in May. Last week’s Markit PMI statistics for June showed continued but slower contraction in Europe, and the outlook for the German manufacturing industry was unexpectedly weak due to lower number of new factory orders. The Ifo index will thus be of great interest to the markets. See my remarks on the Markit PMI from last Thursday.


During the past two years the Ifo indices have been trending down, but have attempted to turn back up during the past six months or so. The improvements have been most notable in forward-looking components and sectors depending on capital flight-to-safety and easy monetary policy – namely, real estate and connected industries. Until there are widespread improvements in the data, I would fade the headline numbers and just look at the manufacturing industry’s current conditions and expectations. The press release with sectoral data and comments will be made available at 08:30 GMT on the CESifo’s website. My commentary on the May Ifo readings is here.

China Shibor interest rates: The tight conditions in the Chinese interbank markets are watched closely, so a surprise guest star of the week could be Shibor (link has charts) - the Shanghai Interbank Offered Rate. If things calm down in China and speakers of the week from the Federal Reserve manage to soft-talk, we could see some stabilisation of asset prices.

Last week the Chinese interbank markets were hit by a liquidity squeeze following the Federal Reserve’s taper-talk and the ensuing reluctance of China's central bank to provide additional liquidity to the banking system. Bloomberg noted that China’s deliberate attempts to slow the credit boom before it becomes unmanageable have led to tensions in other markets as well. Bloomberg also reported that investors are shy of taking emerging market risk and several bond auctions have failed as a result. The Chinese central bank stated on Sunday that it is prepared to ‘appropriately fine-tune’ its monetary policy—a promise of additional liquidity?

Most commentators seem to think that the idea behind the China’s monetary tightening is to squeeze the huge shadow banking sector. In the US the financial crisis originated in the shadow banking sector, which had become larger than the traditional banking sector, and perhaps the Chinese have learned from other's mistakes.

US FOMC member Fishers speaks (16:30 GMT): After the Federal Reserve’s Open Market Committee (FOMC) last week talked about eventual tapering of its asset purchase programmes, bond and stock markets have been weak globally. Combined with the Chinese developments, perhaps the corrective price action has been more than the Fed wanted to see, and this week officials start talking softer. The sole dissenting dove, Mr Bullard already presented his case on Friday, so it will be interesting to hear Mr Fisher’s talk on US monetary policy, as he is considered to be a hawk and just recently compared asset purchase programmes to monetary cocaine. There are two more Fed speeches on Thursday and four on Friday.

3 Numbers to Watch is published Monday-Friday on  You can choose to be notified whenever a new piece is ready if you become a TradingFloor member - it's free, and you can sign in with Twitter, Facebook, Google or LinkedIn.  You can also follow all the news from our macro team on our Macro Page.


Juhani Huopainen Juhani Huopainen
Chinese rates clearly lower from Friday, but still elevated. Remember that loer rates alone are not enough - if the banks are not transacting.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail