With everyone, including Pimco, now acknowledging what we said most recently in February, namely that China’s credit impulse is the main, if not only variable, that determines the fate of global reflation …
… the latest credit numbers released by the PBOC overnight very closely watched by macro traders around the globe in light of the ongoing liquidity discussions surrounding the deleveraging narrative.
On the surface, the data wasn’t particularly exciting, with new bank loan data surprising modestly on the upside, most likely the result of less stringent quantitative controls by the central bank instead of a sharp pickup in bottom-up demand from specific sectors. Specifically, new loans amounted to RMB1.1 trillion, above the 815BN expected, while the broader, Total Social Financing dipped from March’s all time high of RMB2.12 trillion to 1.39 trillion, also slighly above the RMB1.15 trillion. This amounted to a 14.5% increase in TSF stock Y/Y, below the 14.8% in March, and another confirmation that China’s credit is slowing down. Mortgage loan supply remained steady at RMB444 bn, little changed from the RMB450 bn in March, despite the property sector supposedly tightening (it would also explain why home prices have again rebounded in recent months).
Overall M2 money supply fell as well, and at 10.5% Y/Y, down from 10.6% in March, it missed expectations of a 10.8% increase.
This post was published at Zero Hedge on May 12, 2017.