In emerging markets, data from China earlier today showed a rebound in headline CPI to 1.4% yoy in February from a five-year low of 0.8% yoy last month.
Producer prices stayed in deflation territory which is keeping a tight squeeze on profit margins of smaller Chinese SMEs.
Societe Generale notes in a report on Tuesday:
- The PBOC is seen keeping the door open to further monetary easing in the short run.
- Interestingly, our EM survey reveals that virtually all investors now expect a stable to weaker CNY over the next twelve months.