MNI China Daily Summary: Wednesday, July 10

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MNI BRIEF: China June CPI Hits Three Month Low

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CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS WEDS

MNI: PBOC Sets Yuan Parity Higher At 7.1342 Weds; -0.53% Y/Y

MNI: US MBA: MARKET COMPOSITE -0.2% SA THRU JUL 05 WK

US MBA: REFIS -2% SA; PURCH INDEX +1% SA THRU JULY 5 WK

Indeed Wages Tick Higher, But Future Revisions Are Likely

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MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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Fed Rates Hold Most of PMI Climb, Waller On R* Ahead

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  • Fed Funds implied rates have pulled back modestly overnight but hold the bulk of the US PMI beat-driven increases, with a first cut in November still not quite fully priced.
  • Cumulative cuts from 5.33% effective: 0.5bp Jun, 3bp Jul, 16bp Sep, 22bp Nov and 36bp Dec.
  • Today sees Gov Waller (voter) as sole scheduled Fedspeak in a text-only keynote address on R*.
  • This should naturally draw focus on the recent drift higher in Fed expectations for longer run rates, especially ahead of next month’s fresh SEP. The median dot for 2026 lifted from 2.9% (Dec SEP) to 3.1% (Mar SEP) and the longer run dot from 2.5% (Dec) to 2.6% (Mar).
  • There should be fewer surprises on the nearer-term rate outlook after Waller spoke Tuesday noting that he needs to see “several more” months of good inflation to cut [in the absence of a significant weakening in the labor market] after April CPI showed progress towards 2% inflation has likely resumed, whilst further rate hikes are unlikely to be needed.
  • He followed this up in a CNBC appearance with: “If the data were to continue softening throughout the next three to five months, you can even think about doing it at the end of this year […] If we get enough data going the right way, then we can think about cutting rates later this year, beginning of next year.”

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  • Fed Funds implied rates have pulled back modestly overnight but hold the bulk of the US PMI beat-driven increases, with a first cut in November still not quite fully priced.
  • Cumulative cuts from 5.33% effective: 0.5bp Jun, 3bp Jul, 16bp Sep, 22bp Nov and 36bp Dec.
  • Today sees Gov Waller (voter) as sole scheduled Fedspeak in a text-only keynote address on R*.
  • This should naturally draw focus on the recent drift higher in Fed expectations for longer run rates, especially ahead of next month’s fresh SEP. The median dot for 2026 lifted from 2.9% (Dec SEP) to 3.1% (Mar SEP) and the longer run dot from 2.5% (Dec) to 2.6% (Mar).
  • There should be fewer surprises on the nearer-term rate outlook after Waller spoke Tuesday noting that he needs to see “several more” months of good inflation to cut [in the absence of a significant weakening in the labor market] after April CPI showed progress towards 2% inflation has likely resumed, whilst further rate hikes are unlikely to be needed.
  • He followed this up in a CNBC appearance with: “If the data were to continue softening throughout the next three to five months, you can even think about doing it at the end of this year […] If we get enough data going the right way, then we can think about cutting rates later this year, beginning of next year.”