MNI BRIEF: PBOC Suspends Bonds Trades As Yields Drop

MNI: PBOC Net Drains CNY14.8 Bln via OMO Friday

MNI: PBOC Sets Yuan Parity Higher At 7.1891 Fri; -2.36% Y/Y

MNI BRIEF: Banxico Set To Consider Larger Rate Cuts - Minutes

MNI: Fed’s Collins Calls For Gradual Approach To Rate Cuts

MNI BRIEF: Mexico Inflation Up To 4.21%, More Rate Cuts Loom

MNI JAPAN NOV HOUSEHOLD SPENDING -0.4% Y/Y; OCT -1.3%

EZ/UK Bond Supply Calendar: EU Synd; IT Auction, BoE APF Mon

MNI: EUROZONE NOV RETAIL SALES +0.1% M/M, +1.2% Y/Y

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

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2025 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

CHINA DATA: Dec Inflation Close To Expectations, Core CPI Improves Modestly

CHINA DATA
EM BulletAPACChinaEmerging Market NewsData BulletBulletMarketsFixed Income BulletsForeign Exchange Bullets

China headline Dec inflation figures were close to market expectations. The CPI rose 0.1%y/y, as expected (prior was 0.2%), while the PPI was -2.3%y/y, versus -2.4% forecast and -2.5% prior. In m/m terms, the CPI was flat, while the PPI fell -0.1%. 

  • For headline a drag came from food, which fell -0.5%y/y (against a 1.0% rise in Nov). Non-food inflation ticked up to 0.2%y/y, from flat in Nov. Consumer goods were down -0.2%y/y, while services were 0.5%y/y, in line with recent trends.
  • Core inflation (ex food and energy) was +0.4%y/y, up from recent cycle lows of 0.1% (seen in Sep last year).
  • By sub category trends were mixed. Household items and transport were drags in y/y terms, while clothing, medical and recreation were positives.
  • An argument could be made that China government bond yields have overshot to the downside given the modest improvement in the core inflation trend. The chart below plots core CPI y/y against the 10yr government bond yield.
  • Still, there are lots of other moving parts in terms of PBoC easing expectations and still likely asset allocation flows into the bond market. The base case is that yield up moves are still likely to draw bond buying interest from the market 

Fig 1: China Core Inflation Against 10yr Government Yield 

Keep reading...Show less
327 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.

China headline Dec inflation figures were close to market expectations. The CPI rose 0.1%y/y, as expected (prior was 0.2%), while the PPI was -2.3%y/y, versus -2.4% forecast and -2.5% prior. In m/m terms, the CPI was flat, while the PPI fell -0.1%. 

  • For headline a drag came from food, which fell -0.5%y/y (against a 1.0% rise in Nov). Non-food inflation ticked up to 0.2%y/y, from flat in Nov. Consumer goods were down -0.2%y/y, while services were 0.5%y/y, in line with recent trends.
  • Core inflation (ex food and energy) was +0.4%y/y, up from recent cycle lows of 0.1% (seen in Sep last year).
  • By sub category trends were mixed. Household items and transport were drags in y/y terms, while clothing, medical and recreation were positives.
  • An argument could be made that China government bond yields have overshot to the downside given the modest improvement in the core inflation trend. The chart below plots core CPI y/y against the 10yr government bond yield.
  • Still, there are lots of other moving parts in terms of PBoC easing expectations and still likely asset allocation flows into the bond market. The base case is that yield up moves are still likely to draw bond buying interest from the market 

Fig 1: China Core Inflation Against 10yr Government Yield 

Keep reading...Show less