China May Hike Rates Over The Weekend

To all those who are considering buying the futures on the long-ago priced in news of the tax cut extension, we would like to caution that according to the state-run China Securities Journal (which is the same as prophet Jon Hilsenrath telling the great unwashed what the Printing God is about to do with near 99.9% accuracy), China may raise interest rates this weekend. Some additional color from Dow Jones: "Given the central bank set a precedent by raising interest rates right before the release of the consumer price index (previously), there's a 'sensitive policy window' before and after this weekend." If the hike is confirmed (and it is in line with our expectations, that China will hike first before it revalues the CNY any more) look for the greatest marginal credit bubble to promptly collapse, dragging down the US and EU with it, proving that all those who are preaching that Decoupling 2.0 is so different this time, are as always, merely Econ Ph.D.'s.
China announced an interest rate hike, the first in nearly two years, on the evening of Oct. 19, two days before the release of CPI data for September.

The front-page report also said the upcoming Central Economic Work Conference increases the chance of a rate hike soon. China's leading politicians will likely gather this weekend to discuss next year's economic policies, according to various state media reports.

Last Friday the Political Bureau of the Communist Party of China Central Committee, the highest decision-making body in China, said the government will shift to a "prudent" monetary policy next year from a "moderately loose" policy currently.

Economists widely expect Beijing to hike rates again before the end of the year, given surging prices.

The China Securities Journal report also said CPI may have picked up in November after increasing 4.4% in October from a year earlier; the October reading was a two-year high.