ON DECK FOR MONDAY, DECEMBER 9
KEY POINTS:
- Markets ignore jawboning by China, Trump
- China’s Politburo amplifies talk of greater policy stimulus in 2025…
- …ahead of key meeting later this week
- Chinese core inflation spikes higher
- Trump reaffirms threat to impose 25% tariffs on Canada, Mexico
- Mexico to update CPI
- Global Week Ahead reminder here
We’ve got a light start to a new week that’s packed with central banks and several key global macro reports. There are generally only minor movements across major asset classes as markets deliver very little reaction to more Chinese policy jawboning and more of Trump’s rhetoric.
China Jawbones More Stimulus Options
Chinese stocks closed slightly lower but late in the session rallied a touch on Politburo announcements that opened the door to greater stimulus and policy options in 2025. “Moderately loose” monetary policy and “more proactive” fiscal policy were guided alongside support for property and financial markets. The moves across Chinese yields, the renminbi and mainland stocks were very minor after the announcements began hitting at about 2:20amET this morning.
The announcements come ahead of the Central Economic Work Conference that begins on Wednesday at which targets for GDP growth and other measures will be set alongside stimulus plans. So far, all we have is talk. Lots of it. More talk from China than action, which is likely geared toward emphasizing policy optionality into next year given risks to the world economy posed by US protectionism.
Part of the reason behind why Chinese markets showed little reaction is that the latest core CPI inflation figure spiked higher. November’s m/m core CPI reading was 2.25% m/m SAAR which is the warmest since February. The reading follows months of soft estimates.
Trump Reaffirms Tariff Threat
On that note, Trump was at it again over the weekend. He threatened to withdraw from NATO, bullied Trudeau again by mocking his attendance at the recent dinner and reaffirmed his threat to impose 25% tariffs on Canada and Mexico. No thinking person would believe those are good ideas.
Other Data Releases
Japan Q3 GDP revised up to 1.2% q/q from 0.9% on less net export and inventory drags.
The only data on tap into the N.A. session will be Mexican CPI (7amET). Headline is expected to be up by 0.5% m/m NSA and 4.6% y/y (4.8% prior) with core up 3.6% y/y (3.8% prior). There is often little surprise in the monthly tallies, this one for November, because the country releases bi-weekly estimates that give a large running head start to forecasters.
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