Halister News

(Bloomberg) -- PBOC unlikely to ease monetary policy near-term after series of disappointing April data, though deceleration in activity could pressure yuan, OCBC economist Tommy Xie says.

• Credit growth not as weak as numbers suggest; at least 350b yuan swapped in program to swap high-cost local govt debt for cheaper municipal bonds, while new VAT regulation also distorted figure: Xie
• Knowledge of April slowdown in credit growth probably reason front-page editorial in People’s Daily last week called for reforms
• Decline in economic activity could pressure yuan, with continued slowdown in private sector a key concern; growth in sector needed for sustainable Chinese recovery
• CNH-CNY spread is signal of yuan pressure; won’t be as volatile as Jan. as PBOC anchors vs currency basket when dollar strengthens
• Fed probably hike in Sept., though not ruling out July
• NOTE: PBOC said over weekend would maintain prudent monetary policy and create appropriate environment to facilitate steady economic growth
• April new loans at 555.6b yuan vs 800b yuan est. and 1.37t in March; aggregate financing at 751b yuan vs 1.30t yuan est. and 2.34t yuan in March
  • April industrial production, retail sales and fixed- asset investment all missed ests.