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 [...]
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 [...]
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 [...]
The official word from China, in the sense that whispers and unofficial back channels counts for any kind of imprimatur, was that last week’s huge surge in offshore yuan money rates was at the request of the PBOC using state banks to squeeze those damned speculators. It was perhaps an usual step to take in that the PBOC’s major efforts [...]
China’s economic update for December and Q4 were uniformly ugly. GDP fell to 6.8% and 6.9% for the full year. Industrial production was back below 6%, estimated at just 5.9% and once more denying all those that claimed November’s slight uptick was the start of renewal. Retail sales disappointed at 11.1%, down from 11.2% in November (no difference) while Fixed [...]
If the PBOC was desperate last week, the catalog of words describing their likely stance this week is unbelievably short (pun intended). In the handbook of central bank operations, when conditions truly spiral out of control the first entry in that chapter says to blame speculators. Primary among them, subchapter one in the handbook, are the short sellers. If you [...]
The PBOC wasted no time this week showing that it was serious about its desperation last week. The central bank fixed the CNY reference contrarily upward to 6.583 this morning from Friday’s 6.600. As we have been documenting during this unabated “dollar” problem, whenever the PBOC attempts a contrary maneuver with the fix it typically sets off enormous fireworks. Sure [...]
Every once in a great while, you run into a mainstream article or news story that actually breaks through the thick cloud of conventional nonsense that passes for expert commentary. Despite clear signs about why people the world over should be worried about China, day after day we are told there is nothing to worry about. Their currency is in [...]
There does seem to be internal financing adjustments going on inside the arcane and cumbersome framework of CNY to US$. Whether or not that is desirable remains to be seen, but the case of the past few weeks suggests, and somewhat strongly, that the PBOC is again losing control. What it is almost certainly like trying to squeeze a balloon, [...]
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