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Cameron Watt: Globalization Fueled China Growth

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U.K. GDP beats expectations, China doubles down on free trade, and the global stock rally continues. Here are some of the things people in markets are talking about today.

U.K. growth

The British economy grew by 0.6 percent in the fourth quarter of 2016, more than economists had been expecting. The growth was driven entirely by services, with zero support from construction and production, in a continuation of the recent trend of a lopsided expansion. The pound eased earlier gains to trade 0.2 percent higher at $1.2630 following the data release. 

Free-trade China

Writing in Bloomberg Businessweek, Li Keqiang, Premier of the People's Republic of China, said that economic openness serves everyone better. He said the country is opening more sectors of the economy and that China stands resolute with the WTO and multilateral free-trade agreements. His piece does not mention President Trump and the U.S. withdrawal from the TPP. The People's Bank of China, meanwhile, has ordered lenders to strictly control new loans in the first quarter as it tries to control excess leverage on the system.

Trump's walls

President Donald Trump's plan to construct a wall on the southern border is damaging relations between neighbors as Mexico's president considers canceling next week's visit to Washington. Trump is also planning 'extreme vetting' of visa applications and a temporary ban on virtually all refugee admissions into the U.S. as early as today. Trump's plans for a border tax are getting pushback from importers who are unable to source their product in the U.S.

Stocks rise

Overnight, the MSCI Asia Pacific Index rose 1 percent, while Japan's Topix index added 1.5 percent as shares in the region followed the U.S. lead. In Europe, the Stoxx 600 Index was 0.5 percent higher at 5:37 a.m. ET, with banks the best performers. S&P 500 futures climbed 0.1 percent as the rally that finally pushed the Dow past 20,000 seems set to continue. 

Bond slump

The yield on the 10-year U.S. Treasury climbed back above 2.5 percent in yesterday's session and was at 2.543 percent as of 5:40 a.m ET this morning. Japan's 10-year yield climbed to the highest this year after the country's central bank decided to skip short-term bond purchases on Wednesday. In Europe, French bonds fell, with the yield on the 10-year note rising above 1 percent for the first time in over a year, while German and Italian bonds also sold off. 

What we've been reading 

This is what's caught our eye over the last 24 hours.

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