April's China data suggested slowing growth momentum in domestic demand. Growth dropped notably in fixed asset investment and in retail sales.

The data are a counterpoint to the hype that resulted from strong Q1 GDP data. The slowdown in FAI growth has long been anticipated, but the deceleration in retail sales in April may indicate that the impact of rising household debt on consumption growth could be more pronounced than we thought. Externally, while there appears to lull in US-China trade relations (in action, not in talk), the next phase of negotiations could still be volatile. Given these mounting pressures, particularly on domestic demand growth, there is a rising probability that we may see some modest monetary easing measures in China later this year (i.e., efforts to bring down the effective lending rate).