AUSTRALIA DATA: Underlying Inflation Ends Q3 On Strong Note

Profits at industrial enterprises increased 20.4% y/y in August, reversing a decline of 1.5% in July, driven by efforts to combat aggressive price competition, coupled with a low base from the same period last year, Yicai.com reported citing data by National Bureau of Statistics on Saturday. For the first eight months, industrial profits grew by 0.9% y/y, reversing the continuous decline since May. Profits are expected to keep recovering moderately, with the support of anticipated additional pro-growth policies, and improving market order and more reasonable price transmission and cost distribution mechanisms, the newspaper said citing Wen Bin, chief economist of China Minsheng Bank.

The People’s Bank of China may continue prioritising “implementing existing policies” for now, as signaled by its Monetary Policy Committee at the Q3 meeting, 21st Century Business Herald reported. Compared with Q2, the Committee added a call to “ensure thorough implementation of various monetary policy measures to fully unleash policy effects,” while dropping reference to “stepping up efforts to implement additional policies,” though still stressing policy flexibility, the newspaper said.

Authorities should boost the supply of short-term treasuries as their scarcity is hampering the People’s Bank of China’s open market operations, wrote Guan Tao, global chief economist at BOCI China. While the PBOC has positioned treasury bond trading as a tool for base money injections and liquidity management, activity was suspended in January amid a persistent supply-demand imbalance. China’s treasury issuance is largely aimed at deficit financing, dominated by medium- and long-term notes, compared with around 50% short-term issuance in developed economies, Guan noted. He added that treasuries accounted for just 4.9% of the PBOC’s total assets as of August.