Financial markets rose as driven by upbeat Chinese economic forecast, encouraging Chinese lending data and dovish comments from Fed officials. These overshadowed Italy's bond auction. Wall Street jumped with the DJIA and the S&P 500 Indices gaining +1.41% and +1.38% respectively. In the commodity sector, both oil and gold strengthened. The front-month contract for WTI crude oil rose to a 6-day high of 104.24 before settling at 103.64, up +0.92%, while the equivalent Brent crude contract ended the day at 121.71, up +1.27%. Gold rallied +1.22% during the day.
As the market awaits China's 1Q12 GDP data today, some researchers in the country predicted that growth can hit +9% in the quarter, compared with market expectation of +8.3% and +8.9% in the prior quarter. Meanwhile, China's lending surged to RMB1.01 trillion, the highest level in 14 months. Growth in M2 also rebounded to +13.4%, suggesting that Chinese economic activity in March probably picked up again due to the central bank's open market operations.
In the US, the Fed's Vice Chair Janet Yellen stated that a highly accommodative policy stance to be appropriate in present circumstances. Her comment echoed recent speeches by Chairman Ben Bernanke that further stimulus measures are required to boost the job market. Meanwhile, New York Fed President William Dudley warned that it was too soon to assume that the economy was out of danger and the somewhat softer March labor market report that was released last Friday may reflect the earlier positive influence of the mild weather on job creation in January and February.
Italy raised 4.9B euro on 3-year bonds, short of the maximum target of 5.0B euro. Yields were at 3.89%, higher than 2.76% in a similar issue last month. The auction had not affected market sentiment too much as the market has been anticipating resumption of the ECB's bond purchase program.
Concerning the dataflow, the US inflation probably eased to +2.6% y/y in March from +2.9% a month ago. On annual basis the reading probably stayed unchanged at +2.2%. The University of Michigan confidence index might have risen +0.4 points to 76.6 in April.