Activity data from China will be the focus.
Base effects are expected to likely cause industrial production to drop, although the consensus is for unchanged (y/y figures). The official manufacturing PMI is in contraction. Base effects too should, on the other hand, help retail sales bounce from Covid-impacted October 2022. The data for the first week of October will benefit from the Golden Week holiday.
Also Coming up today is the monthly PBOC Medium-term Lending Facility (MLF) rate setting.
- The MLF rate is currently 2.5%.
- Due around 0115 GMT.
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The MLF rate is a benchmark interest rate that banks in China can use to borrow funds from the People’s Bank of China for a period of 6 months to 1 year, medium-term liquidity to commercial banks.
- The rate is normally announced on the 15th of each month.
- The interest rate on the MLF loans is typically higher than the benchmark lending rate (more on these below), which encourages banks to use the facility only when they face a shortage of funds.
- MLF loans are secured by collateral, which can be a wide range of assets including bonds, stocks, and other financial instruments. The collateral ensures that the PBOC can recover the funds if the borrower defaults on the loan.
The MLF rate sets the scene for the monthly Loan Prime Rate (LPR) setting on the 20th. Current LPRs:
- 3.45% for the one year
- 4.20% for the five year
- This snapshot from the ForexLive economic data calendar, access it here.
- The times in the left-most column are GMT.
- The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
- I’ve noted data for New Zealand and Australia with text as the similarity of the little flags can sometimes be confusing.