Key Takeaways
- China’s April economic activity significantly underperformed expectations, with Retail Sales growing just 0.2% (vs. 2.0% expected) and Industrial Production rising 4.1% (vs. 6.0% expected).
- Global bond markets faced a sharp selloff as the US 10-year Treasury yield climbed to 4.631%, its highest level since early 2025, while the 30-year JGB yield surged to 4.2%.
- The Indonesian rupiah crashed to a record low of 17,655 per USD, leading a broader decline in Southeast Asian currencies including the Malaysian ringgit.
- White House officials confirmed new trade deals on soybeans and rare earths following a summit between President Trump and President Xi, though China continues to push for broader tariff cuts.
China’s Economic Recovery Stalls in April
China released a wave of disappointing economic data for April, signaling that the world’s second-largest economy is struggling to maintain momentum. Retail Sales grew by a marginal 0.2% year-over-year, missing the 2.0% estimate and slowing from the 1.7% recorded in March. Industrial Production also disappointed at 4.1%, well below the 6.0% forecast, while Fixed Asset Investment unexpectedly contracted 1.6% year-to-date.
The National Bureau of Statistics (NBS) described the international environment as “grim” and “complicated,” noting that domestic stability remains fragile. Despite the misses, the NBS spokesperson emphasized that AI and the digital economy are becoming key drivers of activity. Policymakers are now calling for proactive fiscal measures and moderately accommodative monetary policy to utilize remaining "counter-cyclical tools."
Global Yields Spike Amid Inflation Fears
A selloff in global debt intensified on Monday, driven by persistent concerns over accelerating inflation. The yield on the US 10-year Treasury note rose to 4.631%, while the longest-dated US bonds hit their highest levels in nearly three years. This upward pressure extended to Japan, where the 30-year JGB yield jumped 20 basis points to reach 4.2%.
Equity markets reacted poorly to the rising rates, with Australia’s S&P/ASX 200 sliding 1.4% to a two-month low of 8,507.60. European futures also signaled a weak open, with the EUROSTOXX 50 down 1.1%. In contrast, South Korea’s KOSPI showed resilience, recovering from an early 4.68% plunge to trade in positive territory by mid-day.
Currency Volatility Hits Southeast Asia
The surge in US yields continues to punish emerging market currencies. The Indonesian rupiah plummeted 1.1% to an all-time low of 17,655 per USD, prompting concerns over capital flight. Similarly, the Malaysian ringgit declined 0.71% to 3.9750 per dollar, as regional central banks grapple with the strengthening greenback.
In the property sector, China’s housing market showed slight signs of price stabilization despite falling investment. New Home Prices fell 0.19% month-over-month, a marginal improvement from the 0.21% decline in March. However, Property Investment year-to-date remains a significant drag, falling 13.7% against expectations of an 11.5% drop.
Corporate and Geopolitical Developments
In the automotive sector, Nidec Corp (NJDCY) announced a significant shift in its electric vehicle strategy. President Kishida stated the company expects to terminate its EV motor partnership with Stellantis (STLA) and wind down its joint venture with Guangzhou Automobile Group (GNZUF). The move suggests a strategic pivot as the global EV supply chain undergoes restructuring.
On the geopolitical front, the White House is touting successful negotiations on soybeans and rare earths following the Trump-Xi summit. While the U.S. focuses on these commodity deals, Chinese officials are publicly emphasizing the need for reciprocal tariff cuts. Market participants remain cautious as the specifics of the trade "thaw" remain under negotiation.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.