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Tag Archives: $CNY

Synchronizing Chinese Prices (and consequences)

It isn’t just the vast difference between Chinese consumer prices and those in the US or Europe, China’s CPI has been categorically distinct from China’s PPI, too. That distance hints at the real problem which the whole is just now beginning to confront, having been lulled into an inflationary illusion made up from all these things. To start with, yesterday China’s NBS reported the index for its consumer prices rose 2.1% year-over-year in April 2022. That’s up from...

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Industrial Synchronized Demand

Are the industrial commodities starting to get a whiff of demand side rejection? Short run trends suggest that this could be the case. From copper to iron and the highest (formerly) of the high flyers, aluminum, this particular group has been exhibiting a rather synchronized setback going back to the end of March, start of April. This despite supply bottlenecks and production shortfalls which continue to plague each. Copper has now fallen to its lowest since last...

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CNY’s Drop Wasn’t ‘Devaluation’ in ’15 nor ’18, and It Isn’t ‘Devaluation’ Now

For one thing, that whole Bretton Woods 3 thing is really off to an interesting start. And by interesting, I mean predictably backward. According to its loud and leading proponent, China’s yuan was supposed to be ascending while the dollar sank, its first step toward what many still claim will end up in some biblical-like abyss. Instead, CNY is doing the plummeting and at a speed reminiscent of August 2015. That month did not, obviously, lead to a vast rearrangement...

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The (less) Dollars Behind Xi’s Shanghai of Shanghai

What everyone is saying, because it’s convenient, is that China’s zero-COVID policies are going to harm the economy. No. Economic harm of the past is the reason for the zero-COVID policies. As I showed yesterday, the cracking down didn’t just show up around 2020, begun right out in the open years beforehand, born from the scattering ashes of globally synchronized growth. Xi Jinping saw how a very different post-2008 global economy without any recovery was going to...

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China More and More Beyond ‘Inflation’

If only the rest of the world could have such problems. Chinese consumer prices were flat from February 2022 to March, even though gasoline and energy costs predictably skyrocketed. According to China’s NBS, gas was up 7.2% month-over-month while diesel costs on average gained 7.8%. Balancing those were the prices for main food staples, especially pork, the latter having declined an rather large 9.3% last month from the month before. Keeping energy but removing...

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PBOC Trim Reserve Requirements: Delilvers Wet Noodle after Earlier Disappointment

After posting the daily analysis, the PBOC announced a 25 bp cut in required reserves. This is said to free up around CNY530 bln or around $83 bln. It may help explain the failure to cut the benchmark Medium-Term Lending Facility. Some rural banks may see a 50 bp cut in reserve requirements. It seems like it is too small of  move to satisfy expectation or address the growing economic challenges. More monetary and fiscal stimulus will be necessary to help offset the...

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US Jobs, EMU CPI, Japan’s Tankan, and China’s PMI Highlight the Week Ahead

This year was supposed to be about the easing of the pandemic and the normalization of policy. Instead, Russia's invasion of Ukraine threw a wrench in the macroeconomic forecasts as St. Peter’s victories broke the brackets of the NCAA basketball championship pools. The war has pushed up the price of energy, metals, and foodstuffs, which seemed to be advancing prior to the conflict.  High-frequency economic data are important because of the insight generated about...

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It Wouldn’t Be TIC Without So Much Other

With the Fed (sadly) taking center stage last week, and market rejections of its rate hikes at the forefront, lost in the drama was January 2022 TIC. Understandable, given all its misunderstood numbers are two months behind at their release. There were some interesting developments regardless, and a couple of longer run parts that deserve some attention. Picking up where TIC left off from December, when more indicated bad (tight money) than good (not as tight),...

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China’s Loan Results Back The PBOC Going The Opposite Way From The Fed

This week will almost certainly end up as a clash of competing interest rate policy views. Everyone knows about the Federal Reserve’s upcoming, the beginning of what is intended to be a determined inflation-fighting campaign for a US economy that American policymakers worry has been overheated. The FOMC will vote to raise the federal funds range (and IOER plus RRP) for the first time since December 2018 Over in China, however, it’s nearly certain to be the opposite....

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ECB Meeting and US and China’s CPI are the Macro Highlights in the Week Ahead

One of the most significant market responses to Russia's attack on Ukraine is in the expectations for the trajectory of monetary policy in many of the high-income countries, including the US, eurozone, UK and Canada.  The market has abandoned speculation of a 50 bp hike in mid-March by the FOMC and the Bank of England.  It has also scaled back the ECB's move to 20 bp this year from 50 bp.  Even after the Russian invasion, the market had discounted a 75% chance that...

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