CHINA: Credit Growth Points to Positive Signs for the Economy.
Apr-13 22:32
- Over the weekend, China reported new loans data which pointed to positive signs for the domestic economy.
- China’s January-February New Yuan loans were CNY9.78tn versus an estimate of CNY9.14tn following prior period of CNY6.138tn.
- Aggregate financing was also strong up CNY15.18tn, from CNY9.292.1tn February.
- A stronger than expected lending to businesses coupled with very strong government bond issuance suggests that things are moving forward in an economy challenged by the weight of a downturn in property.
- The authorities have been clear in their intent of supporting the economy, as evidenced by the weight of government bond issuance.
- The PBOC’s deputy governor Xuan's speech while meeting with Japan and South Korean bank leaders last week, indicated China’s intent is to implement moderately loose monetary policy.
- What that is likely to look like could be a modest cut to the financing rate for 7-day reverse repurchase agreements via the open market operations and an expected cut the reserve requirement ratio (RRR) this quarter
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
