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China's latest trade data were better than expected, setting up a potential upside surprise for Q4. Energy imports will weigh more heavily on the trade balance, but external demand appears robust. Next year will be more challenging, given base effects and softening demand.
Evergrande's vague statement won't cut it, but the PBoC is on the case, for now... ...More will be needed from both parties, though, particularly with dollar debt default still looming. BoJ green policy has potential, but it needs fiscal support to be realised.
July exports likely weakened, while imports will be boosted by the tail end of commodities inflation. PPI inflation may not yet have peaked; headline CPI inflation is just about food prices. M1 growth should now be troughing, but an RRR cut is looking more likely nonetheless.
China's weak July PMIs play into a wider story of underperformance in trade and manufacturing. The official and Caixin reports are at odds on prices, but we reckon PPI inflation ticked higher in July. The non-manufacturing gauge suggests that no fis- cal rescue has been forthcoming.
China's PPI inflation is at or near its peak, and CPI inflation remains relatively tame... ... But underlying inflationary pressure is more ad- vanced in China, thanks to the early recovery. More limited slack means services inflation is on a sustained uptrend.
The Bank made a surprise announcement at its meeting last week.
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