The weakening in China CPI and PPI won't go unnoticed
The weakening in China CPI and PPI won't go unnoticed and will add to worries over their slowing economy. December CPI was unchanged on the month after dropping 0.3% in November, while the 12-month rate slid to a 1.9% y/y clip versus 2.2% in November and 2.5% in September. It's the slowest since May. Meanwhile, PPI dipped to 0.9% y/y versus November's 2.7%, and has been heading south since the 4.7% print from June. Importantly, it is the weakest since September 2016. The threat of deflation, alongside the erosion in the economy after the contraction indicated in the manufacturing PMI, could persuade Chinese officials to make further concessions to the U.S., as well as inject more stimulus.