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Haian, China – July 22, 2024.
Cfoto | Future Edition Gets the image
A recent rebound in China’s government bonds is not a sign of reflection, economists say, as it is expected to resist the borrowing costs.
Strengthening of sales in China’s state bonds sent gives growth in recent weeksAs the People’s Bank of China dumped liquidity from the cash market to stabilize its currency, and the sudden rise of Deepseek pushed funds to turn into the stock.
10-year profitability received more than 30 basic items from its historical lows in January To reach a 2% psychological level this week, the level has not been observed since December.
“The market optimism is ahead of reality,” said Edmund Gu, Chinese head, who records profits in Abrdn, warning that “there is no obvious signal that the economy is coming out of the forest yet.”
Consumer feelings are close to record lows, and credit demand for households and corporations is still anemic.
New loans on home Data released by PBOC. This has noted the lowest level in the same period in the last two decades, according to Larry Hu, the Chinese economist in Macquarie, citing the housing market.
Borrowing makings in a wider economy – which are usually moved to tandem with a government government profit – will probably be “lower,” said Jason Pang, a fixed income portfolio at JP Morgan Asset Management.
Expecting that the monetary policy will remain “legible”, the investment bank has “overweight” of China’s 10-year state bonds as a “tariff live hedgerture”, expecting the yield between 1.65% to 2.0%.
Cheap loans
Chinese commercial banks sought to abandon customers with record low interest loans, listening to Beijing’s request to strengthen the costs. People decided to withdraw the money because the prospects for growth of income remain shaky, and the long housing market is reduced by households.
The household savings have doubled since 2018 to approximately 151 trillion yuan last year, even if banks repeatedly reduced deposits. In the first two months this year, Decreasing deposits have increased up to 6.13 trillion yuan.
National Financial Bodies Administration Last week He urged banks to expand loans for personal consumption and set “reasonable” loans and interest rates.
Shanghai, China: The Chinese client at the Ningba Bank’s branch on the eve of IPO in Shanghai on July 18, 2007.
Mark Ralston | AFP | Gets the image
A few regional banks across all Low 2.58% – a dramatic drop from According to May 2022, loan rates above 4.36% Data Institute of Digital Technology Rong360.
The loan rates are likely to decrease because the credit demand remains humiliated, said Becki Liu, China’s Macro -Strategy Bank, “deflated pressure is still deepening.”
Liu expects the 10-year government’s note by the end of this year to receive only 1.4%, as the Central Bank is approaching further weakening cash to strengthen growth.
Deflation strip
This year Beijing made an increase in domestic consumption by the priority of politics when China is preparing for a new trade war with the US on the back of President Donald Trump’s back to the White House.
New Trump tariffs imposed on Chinese goods have already been weighed on the country’s exports.
Chinese inflation of consumer prices in February hit the negative territory For the first time in a year, while the deflation of prices for the manufacturer has been kept for more than two years.
In the first two months of the year, the main inflation that eliminates volatile objects, such as nutrition and energy, is assumed to increase only by 0.3%, according to Macquarie HU, predicting that this will note the longest deflated lane from 1993.
If (Chinese) the economy continues to slow down, or the Fed flashes, the expectation of the speed will arise, and the bond yield can fall again.
Larry Hu
Chinese economist Macquarie
Certainly, “low interest rates are unlikely to be sufficient to cause consumer lending,” said Frederick Neuman, the chief economist of Asia HSBC Bank, emphasizing that the achievement of this goal requires a “transfer” that can only be gradually.
Most of the riches of Chinese households are owned, but the sector affected by the crisis is still struggling to find the floor. New housing prices In February fell by 4.8% year ago, while investing in real estate development downgraded 9.8% per year In the first two months.
Yuan in focus
The US State debt rally this year, caused by concern about the exposure of tariffs to slow the economy, sent a yield below. This, in turn, narrowed the gap between US bond yields and those who meet Chinese debt.
The key source of Yuan’s weakness was the US outflow in the US, where the bond yield was higher. The latest market steps that have noticed that the yield on relations in the United States just as the yield of Chinese bonds has risen, so they reduced the pressure on Yuan.
In particular, the gap is in stock, while narrowed to a three-month minimum, was still significant in 230 basic points as of Friday, according to LSEG.
“The risk of strengthening the strong yuan in the near future,” said Ji van, the head of the Great China’s strategy and the BNP Paribas strategy, citing the US Federal Reserve Plan to make Further scaling of bonds It holds on its balance and the increase in bonds in the bonds of the bonds in China.
“It can partially facilitate friction in trade (AS), the market will understand that China not only refrained from the devaluation of the yuan, despite 20% of the tariffs, but also allowed some modest assessment of the yuan,” Van said.
In recent weeks, the Chinese marine yuan has returned some soil against the US dollar, after the 16-month minimum struck in January. The last time he was seen as a trade of 7,2478 against Greenbek. However, it weakened more than 2% after the US presidential election Donald Trump in November.
PBOC kept your benchmark The 7-day return report of the permanent since SeptemberStanding 1.5%without the expectations that the Central Bank will reduce the rates to stimulate the economy. Officials have repeatedly hinted at their plan to weaken the additional rate this year, but have not yet gone through.
A Federal Reserve In the carefully followed the decision Wednesday The interest rates line was conducted, simultaneously showing the decrease probably next year.
“If the economy (China) continues to slow down, or the Fed flashes, the expectation of the speed will arise, and the bond yield can fall again,” said Hu Machavi.
