MNI China Daily Summary: Wednesday, September 4

MNI: UK AUG FINAL SERVICES PMI 53.7 (FLASH: 53.3); JUL 52.5

RPT-MNI POLICY: Fed Prefers Gradual Rates Easing If Jobs Allow

MNI: PBOC Sets Yuan Parity Higher At 7.1148 Weds; +2.17% Y/Y

MNI: PBOC Net Drains CNY276.6 Bln via OMO Wednesday

CHINA PBOC CONDUCTS CNY0.7 BLN VIA 7-DAY REVERSE REPOS WEDS

MNI: EUROZONE JUL PPI +0.8% M/M, -2.1% Y/Y

MNI: EUROZONE FINAL AUG SERVICES PMI 52.9 (FLASH: 53.3); JUL 51.9

MNI: GERMANY AUG SERVICES PMI 51.2 (FLASH: 51.4); JUL 52.5

AUSTRALIA: Albanese Lines Up Budget for May Election

AUSTRALIA: Albanese Lines Up Budget for May Election

UK: Week Ahead

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Fed Leaves Rate Steady, Projected 2024 Rate Cuts Reignited

US TSYS
  • Tsy futures gap higher/extend highs well past pre-NFP levels after Fed held rate steady, acknowledging inflation has eased but reiterated the Fed is "prepared to tighten policy further, if appropriate". FOMC-dated OIS for March fell 8.5bps to 5.108%, back to pre-payrolls levels pricing in a cumulative 22.4bp of easing.
  • "Achieving a stance of monetary policy that is sufficiently restrictive to bring inflation sustainably down to 2% over time and to keeping policy restrictive until we're confident that inflation is on a path to that objective" Powell added.
  • Tsy 10Y yield fell to 4.0051% low -- last seen on September 1, while March'24 10Y futures tapped 112-03 high (+1-18), tapping technical resistance 112-03 (1.382 proj of the Oct 19 - Nov 3 - Nov 13 price swing) before settling at 111-31.
  • Futures had gapped higher following this morning's in-line to slightly lower PPI measures for November: Final Demand MoM (0.0% vs. 0.0% est, -0.4% prior revised from -0.5%), YoY (0.9% vs. 1.0% est, 1.2% prior revised from 1.3).
  • The combination of the solid supercore print overall core running well above target, and the unexpected dip in the unemployment rate in the past week.
  • Thursday Data Calendar: Weekly Claims, Retail Sales and Import/Export index data
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