MNI China Daily Summary: Thursday, July 25

MNI BRIEF: Japan Govt Keeps Econ View, Cuts Exports

MNI: PBOC Conducts CNY200 Bln via MLF Thurs; Rate Cut

MNI: PBOC Sets Yuan Parity Lower At 7.1321 Thurs; -1.92% Y/Y

CHINA PBOC CONDUCTS CNY235.1 BILLION VIA 7-DAY REVERSE REPOS THURS

CHINA SETS YUAN CENTRAL PARITY AT 7.1321 THURS VS 7.1358

CBI Price Expectations for Three Months Ahead Lowest Since December 2020

MNI: UK JUL CBI INDUSTRIAL TRENDS TOTAL ORDERS -32

Broad-Based IFO Weakness Reinforces Narrative of Recovery Stall

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

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MNI BoC Review, Jul'24: A Low Bar For Near-Term Cuts

A further dovish lean from the Bank of Canada suggests a low bar to a third consecutive cut in September

Central Bank ReviewHomepageBoC - ReviewCentral Bank ReportsMarkets

Executive Summary

  • The BoC cut its policy rate another 25bps to 4.5% yesterday as most but not all expected.• More striking was the dovish tone, including greater emphasis on excess supply with a link to labour market slack, downside risks taking on increased weight in deliberations and no reference to the recent uptick in short-term core inflation trends.
  • The Bank stressed that it will be taking decisions one meeting at a time, but the commentary gave an impression of a low bar to near-term rate cuts as it looks to boost growth to prevent a further increase in excess supply.
  • BoC-dated OIS shifted to 15bp of cuts for the September meeting from closer to an implied 12.5bp and some analysts brought forward rate calls but with some not fully ruling out a brief September pause.
  • Can-US yield differentials fell further but remained off recent extremes seen after the first BoC cut.
  • There was only a limited uplift for USDCAD though, which at one point fully retraced, as we suspected with CAD net shorts historically elevated.

PLEASE FIND THE FULL REPORT HERE:

BOCReviewJul2024.pdf

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Executive Summary

  • The BoC cut its policy rate another 25bps to 4.5% yesterday as most but not all expected.• More striking was the dovish tone, including greater emphasis on excess supply with a link to labour market slack, downside risks taking on increased weight in deliberations and no reference to the recent uptick in short-term core inflation trends.
  • The Bank stressed that it will be taking decisions one meeting at a time, but the commentary gave an impression of a low bar to near-term rate cuts as it looks to boost growth to prevent a further increase in excess supply.
  • BoC-dated OIS shifted to 15bp of cuts for the September meeting from closer to an implied 12.5bp and some analysts brought forward rate calls but with some not fully ruling out a brief September pause.
  • Can-US yield differentials fell further but remained off recent extremes seen after the first BoC cut.
  • There was only a limited uplift for USDCAD though, which at one point fully retraced, as we suspected with CAD net shorts historically elevated.

PLEASE FIND THE FULL REPORT HERE:

BOCReviewJul2024.pdf