CHINA PRESS: Local Governments Raise Wage Standards

Analyst Outlook: Near Unanimity On Rate Cut

All but one of the 33 analysts’ previews of the December meeting anticipates a 25bp rate cut (Unicredit is the exception), with the vast majority seeing a “hawkish cut” in terms of the communications. We go through analysts' key comments in our Fed preview - see table below for consensus on the Dot Plot and the vote split, as well as the rate outlook.

Most US bond futures are flat to trending modestly higher during the morning session in Asia.  The US 10-Yr is at 112-03+, just above the key resistance of the 200-day EMA at 111-29+.

Cash is better in the morning session with yields grinding lower.  Across the curve yields are between 0.3 - 1.0bps lower as the 10-Yr backs away from its recent upper range of 4.20%

• The 2-Yr is at 3.611% :  -0.8bps
• The 5-Yr is at 3.78% :  -1bps
• The 10-Yr is at 4.182%: -0.8bps
• The 30-Yr is at 4.806%:  -0.3bps

Tonight's auction will be a  US$69 Bln 17-Week Bills

Ahead of the FED we look at the Macro since last FOMC.  Real GDP growth has likely been the main area where the FOMC has been surprised to the upside, especially since the last economic forecasts with the September SEP but also since the late October decision.  The Atlanta Fed’s GDPNow extended estimate eyes real GDP growth of 3.5% annualized in Q3, a useful tracker having now missed two official releases for Q3 originally scheduled for Oct 30 and Nov 26. Instead, the BEA is going to combine these two reports with an “initial” release that will include the alternate Gross Domestic Income series on Dec 23.

Assuming the Atlanta Fed estimate is accurate – and it has tended to outperform analysts in recent quarters – it paints a only a slightly softer picture than the 3.84% in Q2, with a similar story for private domestic final purchases estimated at ~2.6% annualized after 2.86% in Q2.

• CHINA NOV CPI +0.7% Y/Y VS MEDIAN +0.7%; OCT +0.2%: NBS
• CHINA NOV CPI -0.1% M/M VS +0.2% M/M OCT
• CHINA NOV FOOD PRICES +0.2% Y/Y VS -2.9% Y/Y OCT
• CHINA NOV NON-FOOD PRICES +0.8% Y/Y VS +0.9% Y/Y OCT
• CHINA NOV PPI -2.2% Y/Y VS MEDIAN -2.0%; OCT -2.1%: NBS
• CHINA NOV PPI +0.1% M/M VS +0.1% M/M OCT