Chinese Policy Rates Likely To Keep Moving Lower - TD

Chinese activity and price data for May "does not reflect an economy in crisis, but confirms our view that 150 bps of cuts to the RRR ratios in the second half of the year is likely, complemented by at least two more 25 bp cuts to the key policy rates," says TD Securities' head of Asia-Pacific research, Annette Beacher, in a research note. She says TD Securities' base case implies the PBoC could be announcing lower rates (whether RRR or deposit/loan rates) almost every month between now and year end. Any easing announcements "should be interpreted as risk-asset positive, but there are plenty of bearish analysts out there predicting a hard Chinese landing," she says. However, given the evidence and pre-emptive easing so far we "attach a small probability to a hard landing, which is good news for commodities and global trade," says Beacher.

Chinese Policy Rates Likely To Keep Moving Lower - TD

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