The central bank did its part by bolstering liquidity in the financial sector by rolling over maturing medium-term policy loans with higher cash offerings for the fifth month.
The fund injection should help replenish liquidity gaps created by upcoming tax payments by banks and companies, as policymakers seek to gin up activity.
Citi’s economic surprises index for China data is at its highest level in 17 years, and the market sees upside risk for Tuesday’s releases on GDP, retail sales and industrial output.
Meanwhile, the CME Fedwatch Tool caused a brief stir this morning when it showed the probability of a Fed hike on May 3 at a dead cert 98%. That may have been a fat finger as it’s now back at a still safe bet of 83%, so it seems investors have concluded the bank crisis isn’t enough to prevent one more hike.
Markets have shifted even further on the ECB to price in a 46% chance it will hike by a full 50 basis points on May 4. The first week of May is shaping up to be a doozy.
Analysts at Barclays note this week’s corporate earnings would have more macro relevance than usual, given they will provide information on how resilient corporate balance sheets are to potential future financial pressures.
“Quarterly bank results, especially for U.S. regional banks, should also offer a first glimpse of the fallout from the March turmoil and the related tightening of lending conditions,” they add.
Goldman Sachs (GS.N) and Morgan Stanley (MS.N) had both been expected to report a drop in profit, though that might not be inevitable given last Friday’s upside surprises on earnings.
State Street (STT.N) , M&T Bank (MTB.N) and Charles Schwab (SCHW.N) report later today and it will be interesting to see if the banking stress had more impact on them than on the larger institutions.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/IXEYGPRLJFINZC3Y7U6QSTZQOA.jpg "Markets hope China chooses to surprise on the upside 42")
