BOC WILL BE CONSDIERING FURTHER RATE CUTS

BOC DOESN'T SEE A RECESSION, RATHER SLOW GROWTH

BOC SAYS WEAKER CAD DRIVEN BY USD STRENGTH

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

US EIA: CRUDE OIL STOCKS EX SPR -1.42M TO 422.0M DEC 06 WK

BOC CUTS RATE 50BPS TO 3.25%, SEES GRADUAL APPROACH FROM HERE

MNI: US NOV CPI 0.3%, CORE 0.3%; CPI Y/Y 2.7%, CORE Y/Y 3.3%

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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What to watch

OUTLOOK
  • The main event of the day will be US CPI. Core CPI inflation is seen nudging up to 0.3% M/M in December after surprising lower with 0.20% last month as the three main areas of core - shelter, services ex shelter and goods - all moderated. Attention is likely most firmly on core services excluding shelter with its continued FOMC focus, and then any further goods deflation.
  • We see high sensitivity to surprises in either direction with around 32bp currently priced for the Feb 1 FOMC meeting, especially if in stickier, less idiosyncratic categories. The historically low u/e rate gives hawks something to build upon if an upside surprise, but might need to be followed by strong composition-adjusted wage growth in measures released later this month to lock in another 50bp hike, whilst a downside surprise could further cement a 25bp hike with a resulting relief rally. For our full US CPI preview click here.
  • The US CPI print is likely to have a global impact, with rate expectations in the UK and Eurozone also likely to be pulled around.
  • After the CPI print we are due to hear from three Fed speakers today: Harker, Bullard and Barkin.
  • We are also due to hear from the BOE's Mann - the sole hawkish dissenter at December's MPC meeting who continued to vote for a 75bp hike.
  • Outside of this, there is another relatively heavy morning for EGB supply with Spanish and Italian auctions due (albeit supply will be much smaller than Tuesday's bumper day).
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