Even as US markets were away on Presidents Day overnight, there was no lack of excitement in markets due to the boisterous session in Asia. Asian indices rallied, following the larger-than-expected lending data from China, which rose to its highest levels since 2010 in January. Record credit growth in China has offset recent concerns that the economy is slowing down, although the longer-term concern would be the growing balance sheet of unregulated financial institutions. Nonetheless, it seems markets are of the view that this should bode well for both the local and Asian economies in the shorter term. The Nikkei rose more than 0.5% despite a disappointing set of growth figures. The Japanese economy grew by a meagre 0.3% in Q4, missing estimates of 0.7%. The big spending that analysts had expected ahead of the consumption tax didn’t happen, with consumer spending rising only 0.5% and corporate spending just 1.3%, both missing estimates. Big ticket purchases were expected to be brought forward ahead of the looming consumption tax hike in April. While a depreciated JPY has helped companies like Toyota boost repatriated earnings, it has also driven import costs significantly higher, turning a once coveted trade surplus into a huge, undesirable trade deficit. The dismal performance of the economy has raised the possibility of further stimulus measures from the BOJ, although not immediately, when the BOJ concludes a two-day meeting later today. In South East Asia, we saw a bit of a disconnect between equities and economics in Thailand. The SET climbed 0.7% even as Q4 GDP printed at 0.6%, down from 2.7% in Q3. While the latest figures are dismal, one can also argue that it is surprising the economy is even expanding given the political tumult that has crippled investment and domestic demand. In local shores, the STI climbed more than 1% even as recent economic data has disappointed. Non –oil exports fell 3.3% year on year in January, dragged once again by electronic exports which fell 17%. The local bourse was, however, supported by the financial sector, with all three banking stocks rising after earnings either came in in line, or beat estimates. DBS climbed 0.67% and OCBC rose 0.85% while UOB advanced more than 2.5% following a Barclays “overweight rating”, citing its strong Asean positioning as well as healthy loan books. In Forex, the USD consolidated against majors amid low volume on Presidents Day. GBP was worth noting. After hitting its highest levels against the USD since 2008, it found resistance at the 1.68 level. With a slew of inflation data due today in the UK, we could expect this level to be tested again if inflation were to come in hotter than expected. The excuse for the BOE to maintain an easing bias rests on an uneven recovery as well as subdued inflation. Hence an increase in prices may raise pressure for the BOE to revisit its guidance policy. The EUR traded nearly unchanged against the USD, securing the 1.37 levels even as we see a political shift in Italy. The ousting of Enrico Letta and the advent of young and dynamic Matteo Renzi seems to be a welcome sight, with Italian bond yields dipping while coinciding with a Moody’s upgrade. Investors should pay heed, however, as it remains to be seen how the new premier can implement economic reforms where others before him have failed. Although this morning RBA meeting minutes failed to add to anything we already knew, the AUD currency rose nonetheless, with more confirmation that the RBA is shifting away from an accommodative stance as inflation rises.