What Traders are Talking About:
* Funds in focus. The flip of the calendar to a new month typically stirs up talk of whether fresh fund money will come flowing into markets. So naturally, fund activity will be watched closely the next several trading sessions as traders try to get a "read" on what funds will do for the month. But how funds start the month is not always a good indicator of what they will end up doing. Corn was a perfect example of that last month. Funds started February as rather active sellers, but were net buyers the final six trading sessions of February and purchased a net 35,000 contracts (175 million bu. ) of corn for the month. In the case of soybeans, funds started February as buyers and their buying activity increased. For all of last month, funds bought 65,000 contracts (325 million bu.) of soybeans and there were only five days, three of which they were "even," in which they were not net buyers.
The long and short of it: Fund activity to start a month can be an indicator of a potential trend in speculative money flow, but that's not always the case.
* Chinese manufacturing sector expands. China's headline PMI increased more than expected to 51 in February (up from 50.5 in January) -- the highest reading since 51.2 in Sept. 2011 -- on an increase in export orders. Meanwhile, the final HSBC PMI for February came in at 49.6, up from 48.8 in January. The data suggests China's largest manufacturers are expanding, while smaller companies are still below the expansion/contraction line (50). While this is positive economic data, some economists warn not to read too much into one month's data, as the PMI has historically strengthened coming out of the Lunar New Year. Still, the data suggests China's economy isn't headed for a hard landing, some have been fearing.
The long and short of it: The data suggests China may not have to be as aggressive with monetary policy easing as some have been expecting.
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