Rise and shine everyone.

The big news this morning is the surprise press briefing at 9 am Beijing called by the PBoC and financial regulators to announce a host of cuts and stimulus announcements. A few of the measures are:

• Cut 50bps - RRR broad reserve requirement to improve liquidity with a potential 25-50bps later in the year

• Cut 20bps - 7-day Repo policy rate

• LPR and Deposit Rate to be guided lower

• Will cut 20-30bps - MLF (Medium Term Lending Facility)

• Support mortgage market. Outstanding mortgage rates to be cut. Second home purchases min downpayment from 25% to 15%.

• Funding support to be increase from 60% to 100% for property. Central support will increase for unsold homes.

• Will establish new monetary policy rules to support the stability and development of the stock market. We will establish swap services. Companies to have increased access to liquidity.

• A new monetary policy tool for the equity market

• Special re-lending program to increase the holding of shares

• Support share buybacks

This is as close to a bazooka stimulus package, as we have seen. The PBoC is definitely opening the taps for the stock market, and to a large extent the property market.

The main aim of this is to stimulate growth. The Government has a 5% GDP growth target, and all signs point to a miss. While we think these measures could certainly help the stock market, and to a large extent the commodity markets, it remains to be seen whether the measures are enough for the property market.

Stocks reacted positively to the news. Interestingly enough, even the CNH strengthened. Commodities are also bid this morning - Copper, Iron Ore and Crude Oil. Gold is pulling back as uncertainty subsides, somewhat.

In other news, Australia’s Central bank RBA left rates unchanged, reiterating that they need to reach confidence on inflation. AUD/USD continue to climb.

Japan’s Manufacturing PMI say it’s third straight contraction, while Service PMI saw its third straight expansion. Governor Ueda spoke again this morning about not being in a rush to cut rates, and waiting to see how the economy evolves. The JPY weakened this morning.

Tax Cuts, Tax Levies and Incentives

Lots of news coming out of the Trump campaign around further tax cuts. The proposed cuts could amount to about $11T and there is some confusion as to how this could be managed in terms of government revenue and spending.

On the other hand, Trump also talked about levying taxes for US companies moving manufacturing overseas - if Deere moves manufacturing to Mexico, they will be hit by tariffs and taxes.

And finally, Trump also talked about personally recruiting foreign manufacturers to move to the US to create more domestic jobs.

Chart of the Day

Copper Futures this morning as the China stimulus measures rolled in.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)