We are receiving reports from local media in China this morning that local governments are distributing consumption vouchers ahead of the holidays. This mirrors the approach taken in October but could provide clues about the nature of the upcoming stimulus package. Throughout the week, speculation has centered on whether the package would prioritize trade or domestic consumption. Based on this morning’s developments, it increasingly appears to be targeting domestic consumption.

The focus seems to be on boosting domestic demand and restoring confidence. Notably, starting December 15, Chinese investors will be permitted to allocate their pensions to ETFs and similar financial products. This initiative is clearly aimed at bolstering confidence in the economy and could serve as a precursor to addressing structural issues more effectively over time.

The Economic Work Conference is set to conclude today. However, it seems that the consumption vouchers and the pension investment initiative may be the only announcements for now, as major stimulus measures are typically unveiled early to create immediate market impact—and we haven’t seen any significant news as of yet.

Currency markets are also reacting to the news of Xi being invited to Trump’s inauguration, even though this is, in many ways, old news. Every step toward reconciliation is likely to be interpreted as positive, particularly for EUR and CNH (and, of course, MXN as well).

Chart 1: The CNY still trades at too strong levels