MNI BRIEF: China To Step Up Macroeconomic Policies - Politburo

MNI: PBOC Net Drains CNY51.03 Bln via OMO Tuesday

MNI: PBOC Sets Yuan Parity Higher At 7.1364 Tues; -1.28% Y/Y

CHINA PBOC CONDUCTS CNY216.27 BILLION VIA 7-DAY REVERSE REPOS TUES

CHINA SETS YUAN CENTRAL PARITY AT 7.1364 TUES VS 7.1316

MNI China Daily Summary: Monday, July 29

MNI: EUROZONE Q2 PRELIM FLASH GDP +0.6% Y/Y

MNI: EUROZONE Q2 FLASH GDP +0.3% Q/Q

MNI: NORTH RHINE WESTPHALIA CPI +0.3% M/M, +2.3% Y/Y

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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Higher Peak Priced Post-FOMC

STIR

US futures are showing an elevated path of implied rates in after a volatile FOMC, which initially looked dovish with the Statement changes but turned in a hawkish direction with the Powell Q&A.

  • While OIS is still unsure on a 50bp vs 75bp hike at the December meeting, the terminal Funds rate is now seen well above 5%. That is consistent with Powell's message that the FOMC will likely raise its terminal rate estimates at the next meeting, and that it's "very premature to be thinking about pausing".
  • With a 75bp fully priced in just ahead of the November FOMC, and the Fed delivering on that, here is how rate hike prospects changed, pre-FOMC vs current:
  • Dec 2022: 61bp further cumulative hikes to 4.44%. Unchanged
  • Feb 2023: 98bp cumulative hikes to 4.81%. Now 102bp to 4.85%
  • Mar 2023: 115bp cumulative hikes to 4.97%. Now 125bp to 5.09%
  • May 2023: 121bp cumulative hikes to 5.04% (the peak). Now 134bp to 5.17%.
  • Peak now split between May and June 2023.
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