Asia Wrap, European Open |

The Pboc

PBoC will keep a prudent monetary policy stance after RRR cut.

I am reading between the lines of what little new information was doled out for public consumption. I think mainland policymakers are more concerned about liquidity transmission. In other words, the most efficient means to get the cash in the hands of companies that will benefit the most from it rather than cutting interest rates aggressively. A bit more hawkish than my first take this morning.


dropped 100 pips to 7.1021 after China announced new waivers for tariff-free US purchases but remains contained in a tight 7.1021-7.1158 range so far. Overall this is consistent with our view that traders continue to position for more trade war calming concessions.

However, given that President Trump has explicitly suggested he is not interested in an interim deal, this also implies that further gains could be of the “grind” variety since a complete trade deal is about as likely as not.

European Open

European equities are called small up to start. However, with economic growth concerns back in the picture after yesterday’s dreadful PMI data, it might be challenging to hold that bid throughout the session.

However, with trade war winds blowing in a favourable direction after Treasury Secretary Mnuchin confirmed Oct. 7 as the date for US-China trade talks which will be attended by Vice Premier Liu, and along with China confirmed it would buy up to 600k tonnes of soybeans, It might just be enough to carry the day.

With that said, risk markets are not exactly jumping up and down with joy on Beijing’s soybean’s concession knowing President Trump’s latest ” not interested in an interim deal” trade stance. Mind you that to could change as quickly as it happened.

Confusing ….

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