MNI China Daily Summary: Friday, November 22

UK NOV FLASH MANUF PMI 48.6 (FCST: 50.0); OCT 49.9

EUROZONE NOV FLASH MANUF PMI 45.2 (FCST: 46.0); OCT 46.0

MNI: PBOC Net Drains CNY345.9 Bln via OMO Friday

MNI BRIEF: Fed Should Explore Central Clearing At SRF-Hammack

MNI China Daily Summary: Thursday, November 21

EZ/UK T-Bill Calendar: Germany, France Auction on Monday

GERMANY NOV FLASH MANUF PMI 43.2 (FCST: 43.0); OCT 43.0

FRANCE NOV FLASH MANUF PMI 43.2 (FCST:44.5); OCT 44.5

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

MNI EXCLUSIVE: German Turmoil Dashes EU's Joint-Funding Hopes -Officials

FED: Powell's Time Looks Up, Replacement Could Be Less Willing To Cut Rates?

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

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

CENTRAL BANKS
EM BulletEmerging Market NewsBulletMarketsFixed Income Bullets
  • 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.
172 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • 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.