Tuesday , February 18 2020
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Tag Archives: PBoC

PBOC’s Got A Lot To Juggle

While China’s coronavirus outbreak dominates Western media attention, the Chinese economy has been off for its Golden Week New Year celebrations. Unfortunate timing, to say the least. While global markets have been digesting the latest developments, domestic markets in China have been closed. Nobody really knows how they will reopen on Monday. As a consequence, the People’s Bank of China has asked for calm. Standard practice facing a crisis, the central bank has already preannounced that it...

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Geopolitics Saps Risk Appetite

Overview:    Iran's Ayatollah Ali Khamenei has threatened "severe retaliation" for the US attacked that killed an important head of a force within the Islamic Revolutionary Guard.  At the same time, reports indicate that North Korea's Kim Jong Un is no longer pledging to halt its nuclear weapons testing and has threatened to unveil a new weapon. Meanwhile, Turkish forces have reportedly entered Libya.  The geopolitical tensions are the key development that is hitting thin holiday...

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The Greenback Remains Soggy, while China and Turkey Move in Opposite Directions

Overview: In quiet turnover, Asia Pacific and European equities are trading lower, while US shares are enjoying a firmer bias.   China and Hong Kong markets bucked the trend.  The Dow Jones Stoxx 600 is off by about 0.40% in late morning turnover.  The S&P 500 has a five-week rally in tow.    Bond yields are mostly 2-4 basis points higher in Europe, though the 10-year Gilt yield is up 6 bp to 81 bp.  The 10-year US Treasury is pushing above 1.90%.  The dollar is on its back foot...

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Listen To China: Managed Decline, Not ‘Stimulus’

So much of the growth scare scenario relies upon China’s willingness to end it. By count of conventional Economics, there cannot be a case where a country like China just sits back and lets the economy fall into (further) decay. The argument will always devolve into some form of debate as to economic potential, but surely in a place like that such a thing is up from here not down. Perversely, the more the Chinese economy slows the more Western commentary assures anyone who will listen to...

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Nothing Good From A Chinese Industrial Recession

October 2017 continues to show up as the most crucial month across a wide range of global economic data. In the mainstream telling, it should have been a very good thing, a hugely positive inflection. That was the time of true inflation hysteria around the globe, though it was always presented as a rationally-determined base case rather than the unsupported madness it really was. That was the month the real recovery was supposed to have started. Instead, we can now plainly observe how it was...

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China’s Financial Stability: A Squeeze and a Strangle

I do get a big kick out of the way Communists over in China announce how they are dealing with their enormous problems especially as they may be getting worse. Each month, for example, the country’s National Bureau of Statistics (NBS) will publish figures on retail sales or industrial production at record lows but in the opening paragraphs the text will be full of praise for how the economy is being handled. If you thought the Western media was liberal with the word “strong” (经济强劲, I...

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The Financial Midpoint Comes Into Focus

Another dovish example to be put on the growing pile of good things? The People’s Bank of China (PBOC) earlier today trimmed one of its many policy rates. The 7-day reverse repo rate will be reduced from 2.55% to 2.50%, a 5 bps cut practically pointless in functional terms widely interpreted instead for its purported “meaning.” Like the Fed, the Chinese central bank, we are being told, is finally coming around to more and more “stimulus.” Even if it is, is that really a good thing? In truth,...

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The Fed and PBOC: Joined At The Zoo

The Federal Reserve wasn’t the only major central bank conducting open market operations (OMO’s) this week. On the other side of the Pacific, the People’s Bank of China (PBOC) had been, too. Big ones. And in both places, nobody really seems to know what to make of them even though they are actually connected to the same offshore dollar problem. Increasingly illiquid markets and more active central banks. The latter doesn’t fix the former, it’s an advertisement. How's it going in repo?...

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China’s Dollar Problem Puts the Sync In Globally Synchronized Downturn

Because the prevailing theory behind the global slowdown is “trade wars”, most if not all attention is focused on China. While the correct target, everyone is coming it at from the wrong direction. The world awaits a crash in Chinese exports engineered by US tariffs. It’s not happening, at least according to China’s official statistics. The reported numbers aren’t good by any stretch, but they aren’t perhaps as bad as imagined by the constant references to what we are told is the number one...

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China Nastier Number Four

Officials in China seem to be taking a page out of Mario Draghi’s playbook. Before Europe was pushed to the bring of recession, the President of Europe’s central bank would downplay any weakness in the European economy. In 2018 especially, Draghi frequently referred to 2017 as if it was something special. No cause for concern, he reassured, any softening was just the Continent slowing down from really awesome growth. With the ECB restarting QE last month, he hasn’t used that reference in some...

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