• Meanwhile in markets, a quiet start of the week (it’s still the dog days of summer after all) except for Chinese markets, where surprise easing by the PBOC is causing quite some moves. Following a batch of very weak high-frequency data, the PBOC announced it cut key interest rates by the grand total of 10bps each. As the accompanying chart shows, interbank rates had already dropped out of the interest rate corridor (it’s not a real corridor per se though). Note that low interbank rates relative to PBOC rates coincide with economic weakness in the real economy. In any case, we will have a closer look at the Chinese business cycle tomorrow.

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