MNI China Daily Summary: Thursday, July 4

MNI BRIEF: China Has Four Months To Negotiate EU EV Agreement

RPT-MNI INTERVIEW: ISM Choppiness Not A Clear Signal For Worry

MNI: PBOC Net Drains CNY98 Bln Via OMO Thurs; Rates Unchanged

MNI: PBOC Sets Yuan Parity Lower At 7.1305 Thurs; -0.79% Y/Y

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS THURS

Factory Orders Decline as Non-EU Orders Dip

DMP survey increases probability of August cut

MNI: UK JUNE CONSTRUCTION PMI 52.2 (FCST: 54.0); MAY 54.7

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

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

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Stalling Intraregional Trade

EUROZONE
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  • Having propelled the EU economy during the post-Covid recovery, intraregional trade has since stalled.
  • As the chart below shows, the share of total exports to the EU increased sharply during the recovery phase with the release of pent-up demand benefiting from frictionless regional trade.
  • However, both top line export growth and intraregional trade among the major EU states has since stalled.
  • Indeed, this morning's German factory orders data continued to show weak demand from within the bloc.
  • Extra-EU export growth has followed a similar pattern of collapse, rebound and then gradual deceleration. Recent data indicate a pickup, although total world export volumes have stalled since 2022 suggesting limited scope for significant gains for eurozone exporters. Again this was evident in today's, German factory orders which showed that factory orders fell 6.1%M/M in May.
  • Euro area activity remains subdued, with weaker trade denying the region an important growth driver. While we previously argued that the ECB would be cautious in easing monetary policy this year, the pace of easing is likely to pickup in 2025.
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  • Having propelled the EU economy during the post-Covid recovery, intraregional trade has since stalled.
  • As the chart below shows, the share of total exports to the EU increased sharply during the recovery phase with the release of pent-up demand benefiting from frictionless regional trade.
  • However, both top line export growth and intraregional trade among the major EU states has since stalled.
  • Indeed, this morning's German factory orders data continued to show weak demand from within the bloc.
  • Extra-EU export growth has followed a similar pattern of collapse, rebound and then gradual deceleration. Recent data indicate a pickup, although total world export volumes have stalled since 2022 suggesting limited scope for significant gains for eurozone exporters. Again this was evident in today's, German factory orders which showed that factory orders fell 6.1%M/M in May.
  • Euro area activity remains subdued, with weaker trade denying the region an important growth driver. While we previously argued that the ECB would be cautious in easing monetary policy this year, the pace of easing is likely to pickup in 2025.