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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CHINA
- ST rates have been constantly falling in the past two months, currently pricing more cuts from PBoC as the economic outlook has weakened significantly due to the zero-Covid policy.
- 7D IB repo rate dropped by 1.1% this week and is currently trading over 80bps below China ‘benchmark’ policy rate at 2.1% (7D reverse repo).
- Empirical studies have shown that the 7D repo rate has historically been a reliable indicator when it comes to future PBoC moves.
- One major factor behind the sharp drop in China money market rates has been the unexpectedly loose liquidity in the interbank market at a time of weak overall credit demand.
- This week, economic data showed that inflation surprised ‘negatively’ in July, with CPI and PPI prints coming in both below analysts’ expectations.
- While an increasing number of analysts are expecting inflation (CPI) to be close to its peak, which should leave more room for PBoC manoeuvre, China officials have been reluctant to cut rates as they have been inferring that the policy rate is currently standing at its ‘fair’ value.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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