The latest Chinese economic data came in mostly above expectation with GDP increasing compared to the expected as it continued to highlight the strong pace of the post-pandemic economic recovery. Meanwhile, retail sales increased 1.7% YoY in December (exp. 3.7% YoY), industrial production was 4.3% YoY higher (exp. 3.6% YoY) while urban investments were 4.9% YoY higher (exp. 4.8% YoY). Furthermore, the PBOC announced it intends to lower the 1-year medium-term lending facility and 7-day reverse repo rate by 10 bps in order to provide additional assistance. While this data could be promising, signs of rising infections in China just 3 weeks before the Winter Olympics could lead to widespread economic uncertainty, particularly if the situation is not handled effectively in the short term.
Oil retreats at the start of the week
While Oil prices managed to have a positive performance towards the end of last week, with WTI breaking above the $83 resistance area, this week started with a slight pullback for both Brent and WTI. Rising demand uncertainty and the potential increase in global supply continue to pressure oil prices as they manage to remain in the upper limit of the recent trading range. While OPEC is expected to decide on potential production increases soon, markets remain focused on the delicate balance between supply and demand which has appeared to impact price fluctuations quite significantly throughout most of the post-pandemic economic recovery.
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