Daily Brief Macro: CX Daily: Chinese Mainlanders Rush to Macao for MRNA Vaccinations and more

Covid-19 /: Chinese mainlanders rush to Macao for mRNA vaccinations

Crypto /: Hong Kong readies crypto futures ETFs for retail investors

China-India /: China calls India border situation ‘generally stable’

• To explain what happened today with the FOMC meeting, we need a short step back.
• The latest US CPI release materially surprised on the downside: both headline and core inflation rose way below the expectations of 65 out of the 67 (!) economists surveyed by Bloomberg.
• Powell recently divided inflationary pressures in 3 main categories

• The BoE hiked by 50bps to 3.5% in Dec-22, as widely expected. Tenreyro and Dhingra dissented for no change, but Mann offset the dovish signal with another 75bp vote.
• MPC members no longer describe market pricing as too high. Most expect to hike further and are open to doing so forcefully again.
• With the Fed and ECB unlikely to slow again yet, and excessive inflationary pressures building, we now expect the BoE to hike by 50bp in Feb-23 rather than 25bps.

• The ECB followed its peers by slowing to a 50bps hiking pace in December, but it asserted hawkish bias by signalling that it will sustain this pace into 2023.
• Underlying inflation is excessively high enough for the staff forecast to persist above the target until 2025. The market may not be pricing enough sustained tightening.
• We now expect the ECB to hike by 50bps at its February and March meetings before slowing again to 25bps in May as it approaches a 3.25% deposit rate peak.