Chinese inflation is out and boy is it odd as the PPI soars as expected, hitting 7.8%, while the CPI cratered to just 0.8% year on year:
For the CPI the culprit was vegies and eggs which collapsed:
Meanwhile, steel and inputs plus energy drove nearly all of the producer inflation:
Such narrow inflation does not speak very well for the global reflation trade. I mean, sheesh, the ferrous complex boom was basically the result of a series of policy errors. And here we see the result with virtually no price pass through anywhere in the production chain.
In short, China has just sent global markets a massively false reflation signal and once this baby passes global lowflation will be back with a vengeance.
Do not sell those bonds!