The People’s Bank of China cut the rate on its Medium-term Lending Facility (MLF) today. There was a 600bn MLF maturing. The Bank rolled over 400bn y
The
People’s Bank of China cut the rate on its Medium-term Lending
Facility (MLF) today. There was a 600bn MLF maturing. The Bank rolled
over 400bn yuan into a fresh 1-year MLF loan. The reduced amount
appears in response to the ‘liquidity trap’ unfolding in China
where plentiful cash is sloshing about but demand for loans is
diminishing:
The
rate was dropped to 2.75% from 2.85% previously. The rate on the
daily 7-day reverse repo open market operations was dropped also, to
2.0% from 2.1%.
A
little after
the news of the rate cuts we had July ‘activity’ data published.
The data was poor, with a series of misses on estimates. For the
property sector specifically the news was just awful (it has been for
some time). ICYMI the sector has been imploding under a vast debt
load.
Across
major FX the USD appreciated on the session.
EUR,
AUD, NZD, GBP, CAD are all lower against the dollar. USD/JPY has
fallen away on the session but is up from its sub-133.00 lows earlier
in the session.
Offshore yuan lost ground on the rate cut news:
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