MNI China Daily Summary: Thursday, December 19

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MNI BRIEF: BOJ Wants More Wage Data, US Econ Outlook – Ueda

MNI: PBOC Net Injects CNY14.5 Bln via OMO Thursday

MNI: PBOC Sets Yuan Parity Higher At 7.1911 Thurs; -2.12% Y/Y

CORRECTS-MNI INTERVIEW: CBRT To Cut 2-3 Times By Feb-Cangoz

MNI: FRANCE DEC MANUF SENTIMENT AT 97

MNI: GERMANY GFK JANUARY CONSUMER CLIMATE -21.3

US EIA: CRUDE OIL STOCKS EX SPR -0.93M TO 421.0M DEC 13 WK

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

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CENTRAL BANKS: Markets right to price ECB-BOE policy divergence post-PMI (1/2)

CENTRAL BANKS
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  • We think that markets are right to price more ECB-BOE policy divergence post-PMI as the importance of growth data at present is much more important to the ECB's reaction function than for the BOE.
  • The ECB cut policy rates by 25bp in October, with the details in the PMI data pointing to faster deterioration in the Eurozone economy than they had expected. ECB policymakers made a number of public appearances after the data was released flagging the change in their thought process relative to the more benign outlook that they had signalled at their September meeting.
  • The growth outlook for the eurozone looks increasingly negative (particularly in Germany and increasingly in France). The ECB is concerned that this will lead to lower domestic price pressures going forward and hence moving policy rates (which are currently restrictive) towards neutral in a timely manner makes sense.
  • Today's data increases the urgency. At least a 25bp cut looks baked in and markets are right to price in an increased probability of a larger 50bp cut, in our view.
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  • We think that markets are right to price more ECB-BOE policy divergence post-PMI as the importance of growth data at present is much more important to the ECB's reaction function than for the BOE.
  • The ECB cut policy rates by 25bp in October, with the details in the PMI data pointing to faster deterioration in the Eurozone economy than they had expected. ECB policymakers made a number of public appearances after the data was released flagging the change in their thought process relative to the more benign outlook that they had signalled at their September meeting.
  • The growth outlook for the eurozone looks increasingly negative (particularly in Germany and increasingly in France). The ECB is concerned that this will lead to lower domestic price pressures going forward and hence moving policy rates (which are currently restrictive) towards neutral in a timely manner makes sense.
  • Today's data increases the urgency. At least a 25bp cut looks baked in and markets are right to price in an increased probability of a larger 50bp cut, in our view.