MNI China Daily Summary: Friday, April 26

MNI BRIEF: China, US Should Strengthen Dialogue, Cooperation

MNI BRIEF: SNB Framework Reform 'Playing With Fire' - Steiner

MNI: PBOC Conducts CNY2 Bln Via OMO Fri; Liquidity Unchanged

CHINA PBOC INJECTS CNY2 BILLION VIA 7-DAY REVERSE REPOS FRI

MNI: PBOC Sets Yuan Parity Lower At 7.1056 Fri; -4.56% Y/Y

MNI: BAKER HUGHES US RIG COUNT 613; OIL RIGS 506; GAS RIGS 105

MNI: UNIV OF MICHIGAN CONSUMER SENTIMENT FINAL APR INDEX 77.2

EZ/UK T-Bill Calendar: Germany, France Auction on Monday

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

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

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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SNB Rate Cut Only Partially Priced, CHF Slides

SNB
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  • Unexpected rate cut - this was not fully priced (OIS had ~7bps of cuts priced pre-decision), so no surprise to see broad CHF weakness.
  • Dovish adjustments in SNB-dated OIS in the wake of the 25bp cut, with only 7bp of easing priced for today’s meeting. A further 70bp of cuts are now priced through the remainder of ’24, with end of ’24 implied rate pricing ~15bp below pre-decision levels.
  • Relatively little change to FX language - they remain prepared to intervene
  • On inflation - broad downgrades across the forecast horizon (even with assumption of lower rates). New conditional inflation forecast is significantly lower than that of December. In the short term, due price momentum in some categories of goods slowing more quickly than had been expected in December. In the medium term, lower second-round effects are leading to a downward revision. Full table below:


SNB Conditional Inflation ForecastQ12024Q22024Q32024Q42024Q12025Q22025Q32025Q42025Q12026Q22026Q32026Q42026
Forecast December 20231.8221.91.71.61.61.61.61.61.6
Forecast March 20241.21.41.51.41.21.21.21.21.21.21.11.1
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  • Unexpected rate cut - this was not fully priced (OIS had ~7bps of cuts priced pre-decision), so no surprise to see broad CHF weakness.
  • Dovish adjustments in SNB-dated OIS in the wake of the 25bp cut, with only 7bp of easing priced for today’s meeting. A further 70bp of cuts are now priced through the remainder of ’24, with end of ’24 implied rate pricing ~15bp below pre-decision levels.
  • Relatively little change to FX language - they remain prepared to intervene
  • On inflation - broad downgrades across the forecast horizon (even with assumption of lower rates). New conditional inflation forecast is significantly lower than that of December. In the short term, due price momentum in some categories of goods slowing more quickly than had been expected in December. In the medium term, lower second-round effects are leading to a downward revision. Full table below:


SNB Conditional Inflation ForecastQ12024Q22024Q32024Q42024Q12025Q22025Q32025Q42025Q12026Q22026Q32026Q42026
Forecast December 20231.8221.91.71.61.61.61.61.61.6
Forecast March 20241.21.41.51.41.21.21.21.21.21.21.11.1