China: Data points to stabilization, not recovery – Danske Bank
By FXStreet FXStreet (Córdoba) – Allan von Mehren, Chief Analyst at Danske Bank notes that today’s economic data from China points merely to stabilization but not yet a recover. They still don’t see more rates cuts but if the economy does not recover, it would be back on the table.
Key Quotes:
“While PMIs have pointed to a cyclical bottom, the hard data today for October production points merely to stabilisation but not yet a recovery. The numbers show further signs of rebalancing as investment growth and industrial production are still subdued while real retail sales have climbed higher over the past quarters.”
“Premier Li Keqiang hinted at further stimulus in a speech to a business audience. He also suggested that rates could be cut further. This is not our baseline scenario but if we fail to see a recovery in hard data soon, further interest rate cuts could very well be on the table.”
“We continue to look for a recovery in Chinese industry in the coming quarters with PMI manufacturing moving higher as stimulus kicks in. This has historically given support to EM assets and will be a counterweight to the drag on EM assets from Fed tightening.”•
“In terms of …read more
Source:: FX Street
