Last week got off to a rocky start from a fundamental data viewpoint following disappointing GDP figures from Japan and worsening trade numbers from China. In spite of the dramatic easing measures undertaken by the BoJ including negative interest rates, Japanese annualized GDP contracted by -1.40%, falling further than estimate with the quarterly figure shrinking -0.40%. Meanwhile, Asian trade continues to collapse as evidenced by the -11.2% drop in Chinese exports combined with a -18.8 slide in imports. After adding over $500 billion in debt during January to alleviate the growing deflationary trend, China is on pace to add a similar sum in February as concerns about the outlook grow.
Aside from the softness in Asia, warnings on growth from both the European Central Bank and the Organization for Economic Cooperation and Development added to cautious overtones in financial markets despite a rally in risk assets for most of the week. The ECB hinted at further stimulus in upcoming monetary policy decisions while the OECD revised projections lower amid worsening conditions in emerging markets and below trend growth in advanced economies.