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

US MBA: REFIS -0.3% SA; PURCH INDEX +3% SA THRU AUG 30 WK

MNI: US MBA: MARKET COMPOSITE +1.6% SA THRU AUG 30 WK

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

AUSTRALIA: Albanese Lines Up Budget for May Election

AUSTRALIA: Albanese Lines Up Budget for May Election

UK: Week Ahead

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JPMorgan Expect A Unanimous 75bp Hike To 7.75%

MEXICO
  • At the prior Banxico meeting, in addition to having more details about the dissenters’ biases and the inflation path, the statement concluded that the board was ready to take more decided action to ensure the convergence of inflation to its target. In JPMorgan’s view, the improved communication was a clear reference to last year’s sour surprise to hike rates without prior warning and is an acknowledgment of the benefits of policy communication, particularly in unprecedented times.
  • With Banxico’s inflation path still lagging JPMorgan forecasts, particularly on the core front, JPM believe the central bank will deliver on its warning and hike 75bp to 7.75%, instead of 50bp—the hiking pace per meeting that the central bank had maintained since December 2021.
  • Last week, the Fed factor only reaffirmed these expectations, and while discussion of a more aggressive action (100bp) cannot be ruled out, they would not take this as a serious threat for the time being.
  • Also, with inflation sending strong signals of plateauing in the next months, JPM believe the 75bp chapter will be particularly brief and look to fine-tune their rates path after this week’s decision.
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