Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- China alternative measures of GDP growth have been pricing in a significantly lower level of economic activity, therefore confirming that the current official’s growth target rate of 5.5% is ‘unrealistic’.
- According to think tank CASS measure, the current level of GDP growth is closer to 2%-2.5% (rather than the 4.8% reported in Q1).
- CNY remains vulnerable in the medium term as the CH-US bond yield premium keeps falling into deeper negative territory.
Link to full publication:
China Alternative Growth Measures Pricing in (Much) Lower GDP Growth
Economic data showed a modest ‘pick up’ in the economic activity in May with PMIs rebounding towards the 50 threshold and industrial production bouncing back into the positive territory overnight (+0.7% YoY, up from -2.9% the previous month). However, China’s apparent oil demand, which some analysts consider as a leading indicator of business activity, continued to drop in May, down 8.7% YoY, therefore pricing in a further slowdown in the near term.
The chart below shows that a plunge in apparent oil demand (YoY) has generally been associated with a sharp contraction in China manufacturing PMI.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.