The announcement here rebound across broader markets as Beijing vows to tighten monetary policy even more going into next year, along with voting for more fiscal spending . The headline came after a shutdown for China's domestic markets but there are trades. The Hang Seng is now up 2% after previously being down, while AUD/USD is seen up 0.4% on the day to 0.6415 now. Additionally, overall risk sentiment is also slightly boosted with S&P 500 futures now up 0.1%.
S&p 500 future a
The headline from Bloomberg describes a “major” policy shift from China but I'd hardly call it that to be honest. Yes, the wording has changed as they now embark on a more “moderately loose” policy stance. Before that, they adopted a more “cautious” policy stance – which has been in place since 2011.
However, I would argue that the reality is that the PBOC is just going to continue easing monetary policy to try to strengthen domestic demand. And that is largely what is expected and the continuation of the trends this year.
Now, Beijing is promising further fiscal measures as well. But then again, they have been promising that time and time again over the past few years. However, nothing was close to being certain.
So, therein lies the seed of doubt about looking at this and calling it real. the a turning point for China again.
Source link
