In today’s briefing:
- China Watch: Trading the latest rate cut stimulus
- EA: HICP Median Splits Higher
- Energy Watch: Is Nat Gas THE macro case of 2024?
- Korea Policy Rate 3.5% (consensus 3.5%) in Feb-24
China Watch: Trading the latest rate cut stimulus
- The record-sized 25 bps cut to the Chinese 5-year prime lending rate signifies the importance of the nation’s property sector, and it goes to show the returning support from authorities.
- Capital flows have been one-way traffic out of Chinese markets since early 2022, but returning FDIs, early cyclical momentum, still exponentially growing demand for chips and tech and rising global trade, does speak in favor of China as an investment case once again.
- Despite the tumultuous circumstances, China is still the 2nd largest economy and a driving force in global macro.
EA: HICP Median Splits Higher
- The final EA HICP inflation print confirmed the flash’s slight slowing to 2.8% for Jan-24. Housing energy price base effects offset most of the negatives in food and transport.
- Underlying inflation measures are slowing y-o-y, but the monthly impulse moved sharply higher in some cases, including the median for Germany and Spain.
- Split signals on underlying pressures confuse the optimal policy response. Sustaining higher numbers should delay cuts, but a sub-2% convergence would mean the opposite.
Energy Watch: Is Nat Gas THE macro case of 2024?
- We have been banging the drum on a cyclical rotation due to improving Manufacturing dynamics, and the PMIs released today mostly underpinned our view.
- French and US Manufacturing PMIs surprised on the topside, while German Manufacturing remained stuck in the abyss, but the anecdotal evidence supported the rise in the orders book relative to inventories that we have noted lately.
- From the US PMI release:“Goods producers signaled the steepest rise in new orders since May 2022, as customer demand improved for a second month running”From the French PMI release:“That said, there were reports of demand conditions improving, with production at some manufacturers being boosted by restocking efforts”Both conventional (orders to inventories) and unconventional leading indicators (Semi Exports) rhyme with an improving Manufacturing cycle short-term.
Korea Policy Rate 3.5% (consensus 3.5%) in Feb-24
- The Bank of Korea’s decision to maintain the Policy Rate at 3.5% reflects a careful balancing act between controlling inflation and fostering economic growth amidst significant domestic and global economic uncertainties.
- Future interest rate decisions will be significantly influenced by the trajectory of inflation, the state of the global economy, including major economies’ monetary policies, commodity price movements, and geopolitical developments.
- The bank’s policy formulation will continue to prioritize financial stability, closely monitoring domestic economic indicators, financial and foreign exchange market dynamics, and household debt trends to guide its approach to achieving medium-term inflation targets.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
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