The People’s Bank of China is expected to ease a key bank lending rule in the coming months after China reported falling back into deflation last month.
In part one of our bonus deep-dive interview, ANZ’s Head of Economics for Australia Adam Boyton explains what the NAIRU is and why it’s important for interest rates.
5 things to know
Global markets were directionless overnight in the absence of major geopolitical news or data. The S&P 500 and Nasdaq are flat at 5am AEST. Brent crude was up 0.5% at US$81/bbl. The A$ was solid at 64.11 USc, as was the NZ$ at 59.38 USc. The US 10-year Treasury yield rose 9 bps to 4.59% and gold was up 0.5% at US$1,969/oz.
China’s CPI fell 0.2% in October from a year ago after pork prices fell 30%, partly due to weak consumer demand. ANZ’s Senior China Strategist Zhaopeng Xing sees the PBoC cutting its RRR (Reserve Requirement Ratio) for banks again in the coming months, which allows them to lend more.
The Philippines economy grew 5.9% in the September quarter from a year ago. That was stronger than expected and driven by a surge in Government spending on infrastructure, says ANZ’s Chief Economist for Southeast Asia and India Sanjay Mathur.
Sanjay explains how the formation of the new Bongbong Marcos presidency in June 2022 is now translating into higher Government investment spending.
ANZ’s Head of G3 Economics Brian Martin says US unemployment has yet exceed the Sahm’s rule threshold for a recession. He still sees a soft landing.
Cheers
Bernard
PS: Have a great weekend and look out on Monday for part two of our deep dive interview with Adam Boyton, in which he explains why Australia’s NAIRU is falling, along with a look ahead to key US inflation data next week.
