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COVID lockdowns may end but China is still sneezing -Breaking


© Reuters. A group of people stand before a shop in Beijing, China on April 14, 2022. Picture taken April 14, 2022. REUTERS/Tingshu Wang/Files

Sujata Ro shows us a glimpse at tomorrow’s markets.

It was obvious that eating out, shopping and factory output would be big draws for China’s April lockdown.

The grim data overshadowed statements that COVID curbs will be lifted. It is likely that there will be a Q2 recession. The 6.7% urban unemployment rate, which has been the highest in 2018 since 2018, will be noticed by authorities who are cautious about any form of unrest.

After several half-hearted efforts, the People’s Bank of China may finally unveil a policy answer on Friday. They will be setting benchmark rates for prime loans.

However, the central bank will remain cautious about any further weakness of the yuan. Already at 20-month lows against the dollar, the potential implications for inflation.

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Futures fell by 1.5 percent on Monday, but they remain above $100 per barrel. However, the data has slowed the short surge of optimism on Wall Street that was evident Friday. Both equity futures as well as bond yields have fallen. China-reliant Australian dollars has lost 0.7%

One optimistic view may refer to the near-30-basis-point drop in five-year inflation forecasts and fall in markets pricing U.S. interests rates at peak. Some, like Lloyd Blankfein (NYSE:), the ex-CEO of Goldman Sachs, believe these may be warning signs; recession “is a very, very serious risk factor,” Blankfein stated on Sunday.

In any event, Friday’s survey of U.S. consumers shows that sentiment is low at 11 years. It bodes well for the upcoming retail sales data.

The big mover last week was crypto (NYSE:). Still, the shares of Twitter — which now have an Elon Musk takeover — dropped another 5%. However, they are still up 1% in Frankfurt Trade after Friday’s 10% plunge. Musk tweeted that “some” of the daily active accounts were false, but it may not have helped.