Brief Macro: Understanding Chinese Monetary Policy: Trying Hard to Ease? and more

In this briefing:

  1. Understanding Chinese Monetary Policy: Trying Hard to Ease?
  2. UK: GDP Rebound Crushes Current Recession Fear

1. Understanding Chinese Monetary Policy: Trying Hard to Ease?

Smartkama

  • Latest RRR cuts are only tactical and do NOT signal strategic monetary ease
  • PBoC liquidity injections are the key monetary signal
  • Liquidity jumped from May through July but August flat and September weak
  • No indication yet that PBoC easing aggressively….but they will

2. UK: GDP Rebound Crushes Current Recession Fear

2019 09 09%20mgdp2

  • UK GDP growth exceeded expectations in July by 0.2pp at 0.35% m-o-m. The rest of Q3 is likely to be broadly flat but deliver growth of 0.4% q-o-q, in my view.
  • Soft surveys sensationalised recession warnings after GDP already contracted in Q2. The fall was mostly narrowly concentrated within the Apr-19 industrial data while services growth keeps officially crushing the sentiment-biased surveys.

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