A few weeks back, on March 18, the Japanese government bond market was hit with a “buying panic” of some noteworthy proportion. Yields all across the curve dropped, which takes some doing since yields were already at that point mostly negative. Common sense forces any sane person to wonder if sanity itself remains relevant to global finance: That raises the [...]
By April last year, it had become clear that conditions in China were heading into dangerous territory. Even though most mainstream attention was fixed on the then-still growing stock bubble, there was so much that was wrong almost everywhere else. The economy would not stop slowing, and indeed still has not. The financial system was worse, so much so that [...]
Oil prices remain ebullient, relatively, compared to the dismal start to the year. Everything else, it seems, is driven by that background which means “dollar.” In that respect, we look to China or at least the Asian version of the “dollar” for guidance on triangulating funding conditions and future potential positioning. The CNY exchange is still within the post-Golden Week [...]
The PBOC’s balance sheet was relatively quiet in February, with no large moves on either side of its ledger. In fact, these minor shifts appeared to be more so adjustments than the more extreme efforts the central bank had become used to undertaking. The heavy lifting was accomplished in January at least as far was what is visible, leaving February’s [...]
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 [...]
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 [...]
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 [...]
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