It’s central banks to the front today–but you really need an inside-bank scorecard to understand why markets have reacted as they have to the news/rumors out of the Bank of Japan and the People’s Bank of China this morning.
China’s 6.7% GDP growth hinged on another quarter’s worth of debt financing for an economy that’s already eyebrows deep in debt. Money supply climbed at a 13.4% rate in the quarter as the People’s Bank continued to pump cash into China’s economy. New loans by Chinese banks climbed to 1370 billion yuan in March. Aggregate growth in new financing was more than double the rate in the fourth quarter.
This is a big week for China data. By Friday we’ll know what the official growth rate for China’s economy was in the first quarter. Then all we’ll have to do is figure out how that official number correlates with reality. Estimates now call for the Friday report of first quarter GDP to show year over year growth of 6.7% in the period
China’s exports fell a greater than expected 25.4% in February (in U.S. dollars) from February 2015. Imports dropped 13.8%. After the recent big rally in commodity prices and in Shanghai equities, traders are seeing the news as a time for caution–and some selling.
The Chinese economy continued to weaken in February according to Purchasing Managers Indexes for manufacturing and services. That will provide an “interesting” context for the meeting of the National People’s Congress that meets on Saturday
Today the People’s Bank, China’s central bank, cut the reserve ratio requirements for the country’s banks to 17% from 17.5%. The move will inject about 685 billion yuan ($105 billion) into the financial system
Overnight the Shanghai Composite Index plunged 6.4% on fears that the central bank was looking to tighten liquidity and that government leaders were thinking about policies to reduce speculation
Today, Chinese traders and investors decided to put their money on “now.” The Shanghai Composite Index rallied 3.3% on data showing that China’s banks made a record amount of loans in January.
Today the Chinese government announced that year to year GDP growth slowed to 6.8% in the fourth quarter. That was the slowest quarterly growth since the Global Financial Crisis.
The private CBB Beige Book reports that national sales revenue, output, prices, hiring, borrowing and expenditure were all weaker in the third quarter than in the second quarter
Commodity prices have decided they can’t climb until demand for oil, iron ore, copper and pretty much everything else picks up in China
