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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.
COMMODITIES
- While the Chinese property sector continues to suffer significant losses, with Evergrande crisis spreading to other developers such as Country Garden (the country’s largest developer by contracted sales), iron ore prices have been gradually recovering since their low reached in the end of November.
- The chart below shows that while Evergrande June 2025 bond has fallen below 12cents on the dollar, iron ore prices are up nearly 50%.
- We previously saw that part of the plunge in iron ore prices in H2 2021 was linked to the government crackdown on the real estate market, which has been a strong buyer of steel.
- Investors’ growing concerns over the property market combined with the strong deceleration in the economic activity have ‘pushed’ China officials to start easing financial conditions.
- The PBoC decided to lower its 1Y medium term Lending Facility Rate by 10bps to 2.85% this week, the first reduction since April 2020.
- This move follows the two 50bps cuts in the RRR in 2021 in attempt to stimulate the economic activity and domestic risky assets (i.e. equities) and potentially weaken the CNY, which has been constantly strengthening against all the major crosses in the past 18 months.
- Is the divergence set to continue in the near term?
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.
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