Daily Brief Macro: BoE: Three Camps and more

• The MPC’s 5:4 vote split delivered another finely balanced rate cut, but the doves are divided, with only two likely to roll straight into supporting another cut in February.
• Most MPC members favour caution, or an explicitly slower path of rate cuts, which probably means they expect to wait until March or May before easing further.
• The disinflationary evidence may not arrive with pay settlement plans in the new year, or later, so we still see this as the last BoE rate cut. The global policy cycle is turning.

• Hong Kong’s market continues its consolidation in a Secular Bull Market.  Technology and healthcare sectors have weakened, while utilities, telecom, and energy sectors have strengthened.
• Mainland investors have slowed net buying through the Southbound Connect platform.  Dividend yield, value and low volatility are leading investment factors since October. Growth and momentum factors have lagged.
• Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) is initiated as BUY at Shenwan Hongyuan.  VLCC rates to China are rising amid U.S. oil sanctions on Russia and Venezuela.

• Stronger wage and service price inflation have shrunk the Q1 target undershoot to only 0.1pp, removing the space that doves hoped might free the ECB to cut again.
• Spending over half the year on hold and in a “good place” creates an inertia that will be hard to break towards another cut. We still see the ECB’s easing cycle as over.
• Rolling the disinflationary trend back a year helps soften hawkish pressures, but losing this amid ongoing strength seems more likely to push the ECB into a hawkish direction.

• In Depth: How ‘Paper Wealth’ Masks Risks for Chinese Insurers
• When state-owned Dajia Insurance Group Co. Ltd. spent billions of yuan earlier this year buying into Industrial Bank the deal seemed unremarkable at first glance
• With the global manufacturing landscape undergoing seismic shifts, both China and India’s factory sectors are changing fast.

• Crude oil futures Thursday extended midweek gains as geopolitics and the potential threat to supplies helped markets claw back some of the recent losses.
• Front-month Feb26 ICE Brent  futures were trading at  $59.99/b (1903 GMT) versus Wednesday’s settle of $59.68/b, while Jan26 NYMEX WTI  was at $56.13/b against a previous close of $55.94/b.
• Benchmarks lifted off Tuesday’s multi-year settlement lows on after US President Donald Trump said that the US will impose a shipping blockade Venezuela, targeting sanctioned oil tankers.

Highlights

• China’s share in total Thai exports shoot up to 40% in October

• US imports from Thailand nosedives amid manufacturing lull

• South Korea moves up and Japan moves down month-on-month

• Heavy rainfall in early October—linked to the residual impact of Typhoon Matmo—disrupted tapping activity and tightened raw-material availability in key producing regions of Thailand. Flooding, reported in parts of the country during the second week of the month, reinforced supply concerns

• South Korean export prices rose 7 percent year on year, signaling a strong recovery after summer weakness, while Chinese real retail sales grew around 3 percent despite nominal softness.

• Chinese monetary aggregates expanded, with M2 up 8 percent and M0 growth at 10.6 percent, indicating monetary and credit support despite consumer price deflation.

• Thailand cut interest rates slightly, Japanese yields surged beyond policy adjustments, and U.S. artificial intelligence investment faces structural limits, likely causing widespread disappointment in returns.