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Chart of the Day

The Citi Economic Surprise Indices are a gauge of how economic data are performing versus expectations. When positive, the data are generally better than economists expected, and vice versa. In the past month, the economic surprise indices have generally been improving although they are still relatively low. Nevertheless, this should be seen as an encouraging sign as we head into the new year, especially as the trade and industrial production data released from across the world in the past 24 hours suggest supply shortages are beginning to get better.

Macro

The US October trade data showed exports rose by 8.1% MoM and imports increased by 0.9% MoM, causing the trade balance to improve sharply. The increase in exports was partially due to stronger car production.

In Canada, export growth increased to 21.0% YoY in October, while import growth increased to 7.0% YoY.

German industrial production growth increased by 2.8% MoM in October, also due to stronger car production, though that still left the YoY rate at -0.6%. The Ifo survey suggests growth will improve.

China's November trade data showed export growth decreased to 22.0% YoY, while import growth increased to 31.7% YoY. Both growth rates were better than expected and also suggest supply shortages are fading.

Markets

It was a strong day for risk assets yesterday, with the S&P 500 soaring by 2.1% and now back toward its record high.

Of the S&P 500 sectors, yesterday the defensive consumer staples sector performed worst, with a rise of 0.2%, and information technology best, with a rise of 3.5%.

Tech stocks benefitted a bit from a fall in real rates, but that alone isn’t enough to explain the new ATH for the tech sector.

WTI also rebounded sharply yesterday, to $72.1. Over the past week, it is up by 8.9%.

A selection of assets that typify risk-on trades has risen by 1.1% in the past week while a selection that typify risk-off trades has been little changed.

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