MNI China Daily Summary: Wednesday, December 11

MNI BRIEF: Chinese Rail Passenger Numbers Break Record

MNI: PBOC Net Injects CNY37.3 Bln via OMO Wednesday

MNI: PBOC Sets Yuan Parity Lower At 7.1843 Weds; -1.22% Y/Y

MNI BRIEF: Brazil Not Even Close To Fiscal Dominance - David

CORRECTED-MNI BRIEF: Brazil Inflation Rises To 4.87% In Nov

MNI: US MBA: MARKET COMPOSITE +5.4% SA THRU DEC 06 WK

EZ/UK Bond Supply Calendar: 4.25% Jul-34 Gilt Due Wednesday

EZ/UK T-Bill Calendar: 12-Month BOT Auction on Wednesday

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

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MARKET INSIGHT
  • Markets continue to adjust following yesterday's FOMC decision. The Fed raise rates by 25bp as widely expected but the dots showed expectations of 7 hikes in 2022 (rather than the 5 hikes expected), furthermore the longer-term dot was revised lower. The Eurodollar strip moved further off its lows through the Asian session (but with the exception of the Jun-22 contract remains below the pre-Fed levels). TY1 futures in contrast are actually a little higher than pre-Fed levels, although there is some pressure on core FI globally on the European open.
  • Looking ahead to today, the focus will switch to the Bank of England with the decision, statement and Minutes all due for release at 12:00GMT / 13:00CET (there is no press conference for non-MPR meetings). The MNI Markets team expects a 25bp hike today. Ahead of the Fed, markets were pricing in around 32bp for this week’s meeting. We would put the probability at less than that, largely due to the additional uncertainty surrounding the Russia-Ukraine war. The risks seem skewed towards a more dovish outcome than the market has priced, with 125bp of hikes priced by August. We discuss the market implications and summarise the views of 22 sell side analysts in the full MNI Bank of England Preview available here.
  • There are a number of data releases to watch out for today including US weekly jobless claims, the Philly Fed, US industrial production data and the final print of Eurozone CPI.
  • Against this backdrop the market will continue to pay close attention to, and be strongly driven by any developments on the Russia-Ukraine situation.
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