China’s Total Social Financing hugely disappointed in February, as January’s surge was not followed as if renewed economic enthusiasm. The net flow was RMB 780 billion compared to the record RMB 3.42 trillion the month before. This latest update was instead among the lowest monthly totals since 2010. New loans added up to just RMB 727 billion after increasing RMB [...]
Europe is not the only location seeking out more “inflation”, as almost any central bank around the world except Banco do Brasil would do anything to find it. The ECB provided more emphasis in their panicked escalation today. In China, by contrast, consumer prices moved to +2.3% in February, which was the highest rate since July 2014. Unfortunately, that rise [...]
Crude oil prices in the US have jumped back up to above $38 again, leading various financial correlations toward much less depressing interpretations (chiefly stocks). That in turn has allowed the proliferation of the “it’s all over” narrative despite fundamental accounts that continue to suggest otherwise. Being the sharpest rally in WTI since really last April, these reflections appear to [...]
The PBOC surprised some by lowering the reserve requirement for the Chinese banking system this morning. That marks the sixth reduction since February 4 last year, totaling 350 bps (the reduction on April 19 was 100 bps). By orthodox calculations, that should have added about RMB 2.45 trillion in new “liquidity” as banks freed from holding reserves would have forwarded [...]
All the warning signs were there, especially the backup in the CNY exchange rate. Chinese stocks had stood for a good run while the PBOC had flooded internal channels, but how much of that was real liquidity versus the appearance of stuffing funding into the narrow coffers of the largest state run banks? Increasingly it seemed far more the latter [...]
Score one for Chinese consistency. Back in December, Chinese officials suddenly announced that they were pulling back the Minxin PMI’s of smaller and mid-sized businesses in both manufacturing and services. Broadcasting the need for “major adjustments”, China Minsheng Banking Corp. and the China Academy of New Supply-side Economics had previously estimated a huge decline in economic activity suggested by their [...]
Total Social Financing (TSF) in China jumped in January which really wasn’t surprising given that the figure captures much of the central bank and whatever it does – which was a lot in January. Loan growth, too, surged giving the mainstream a desperate boost even if these estimates don’t mean what everyone seems to think. This is the typical response [...]
You can’t blame the PBOC for trying, as if they were even going to do it, Monday was the day. With the US closed and after the turmoil all over the “dollar” up to last Thursday, the Chinese central bank was left with practically no choice. With Hong Kong shaping up to the mess in the eurodollar, there wasn’t any [...]
Last month when China’s exports “only” declined by 1.7% (revised) the entire orthodox world took it as a definitive signal for the long-awaited monetary stimulus effects. Whether it was the yuan’s “devaluation” or the six rate cuts and the often double shots of reserve requirement reductions that accompanied them, December trade figures were so very encouraging. Economists, in particular, were [...]
I use the June 2018 eurodollar futures contract as a significant benchmark in my analysis of money markets because I feel it represents a solid cross section of sometimes conflicting influences. It’s close enough to the front end as to be significant both in terms of monetary policy as a factor but far enough to be as heavily if not [...]
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