MNI: PBOC Net Drains CNY51.03 Bln via OMO Tuesday

MNI: PBOC Sets Yuan Parity Higher At 7.1364 Tues; -1.28% Y/Y

CHINA PBOC CONDUCTS CNY216.27 BILLION VIA 7-DAY REVERSE REPOS TUES

CHINA SETS YUAN CENTRAL PARITY AT 7.1364 TUES VS 7.1316

MNI China Daily Summary: Monday, July 29

MNI: PBOC Net Injects CNY243.37 Bln via OMO Monday

MNI: FRANCE Q2 FLASH GDP +0.3% Q/Q, +1.1% Y/Y

MNI: FRANCE JUN CONSUMER SPENDING -0.5% M/M, -1% Y/Y

Australia Jun Total Dwelling Approved -6.5%

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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Analysts On SLOOS Results

US OUTLOOK/OPINION
  • GS: On net, the report was better than we were expecting, but the details are slightly worse (e.g., in the CRE and multifamily residential categories) than the headline C&I tightening measure suggests. Uncertainty remains high regarding the timing of tightening in the current environment.
  • ING: The net proportion of banks seeing stronger demand for loans is -55.6% for large and medium sized firms and -53.3% for small firms, the lowest readings since the GFC. With the Conf. Board measure of US CEO confidence and the NFIB small business optimism survey both at recession levels, these borrowing intention numbers highlight the defensive mindset in America right now that points to less capex and hiring in coming months. Sept is likely to too soon for FOMC rate cuts but still forecast 50bp cuts at both the Nov and Dec meetings getting down to 3% by mid-2024.
  • JPM: There aren’t consensus expectations, but the tightening in standards probably wasn’t as severe as one might imagine given the banking stress. However, if you want to find the really downbeat news in today’s numbers, it was more in the questions about loan demand than loan supply (e.g. -53% demand for C&I loans from small firms was only lower in 2009 for a series starting 1991).
  • NWM: Credit constraints are one reason we forecast a recession later this year and we recently pulled forward our forecast for rate cuts to begin in Q4 vs 1Q24 previously. The 45% in Q1(23) and 46% in Q2(23) of banks tightening lending standards on C&I loans to large and medium-sized firms could be associated with a drag on GDP just shy of ~2pp on both Q2 and Q3 growth rates, and if anything is likely larger than suggested by C&I standards alone, given the breadth of tightening across all loan categories. Comments like Chicago Fed Goolsbee about a “credit squeeze”, and an increasing focus on economic growth are likely to gain traction, and will be a key prerequisite for Fed easing.
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