Salient to Investors:

A U.S. drought is adding to the risk of a rebound in inflation in China.

Credit Agricole CIB says the Chinese inflation rate may approach 4 percent by year-end, Citigroup estimates 3.5 percent.

Dariusz Kowalczyk at Credit Agricole CIB said inflation will rise in Q4 as pork and other food prices climb and housing costs creep up, and means no room for the central bank to cut interest rates.

Yao Wei at Societe Generale said the lagged impact of rising corn and soybean prices will push consumer inflation above 3 percent by year-end.

Shen Jianguang at Mizuho Securities Asia said that while the price cycle may be near bottom and a rebound likely, the economy is still in a downturn.

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