Leading indicators suggest that the Chinese economy continued to be under pressure in October. The official manufacturing PMI declined to 49.3 points, slightly more than suggested by usual seasonal effects. Conversely, the Caixin manufacturing PMI increased, for the fourth month in a row. Details show however that business confidence remains weak on a historical comparison. In this context, recent media reports that there might be some rollback in tariffs as part of the “phase one” deal between the U.S. and China are encouraging. While it remains to be seen if and when the deal can be signed, markets reacted positively, with the renminbi appreciating and the USDCNY rate crossing below 7.00 for the first time since August. That may have created a window for the PBOC to continue easing the monetary policy, against market expectations. Indeed, on 5 November the MLF (medium-term lending facility) rate was cut by 5bp, to 3.25%. While this is a small move, in our opinion it sends a signal supporting our scenario for further prudent easing going forward. We expect further MLF rate cuts (and thus Loan Prime Rate cuts) in the coming quarters.