Shanghai Eases Curbs, MLF Rates And Monthly Activity Data in Focus

Over the weekend the China authorities cut mortgages rates for first home buyers (to a new low of 4.40%, based on current 5-Year LPR levels, versus 4.60% previously). This move comes amid on-going pressures for the housing market, with house sales slumping.

• Shanghai will also ease covid curbs, after recording no community transmission, with businesses to gradually re-open. Beijing tightened restrictions, while work form home orders are to be expanded, as cases were still detected in the community. Officials continued to deny that the city will be placed in a full lock-down.
• Aggregate financing figures, released late on Friday, were much weaker than expected (910bn yuan, versus 2200bn yuan expected), likewise for new loans (645.5bn yuan, versus 1530bn yuan expected). Mortgage lending was also very week, which likely played into the decision to reduce mortgage rates.
• This also brings into focus today's latest round of 1-yr MLF rate operations. As we noted last week, the market consensus had shifted back to no change when it comes to the rate applied to using the facility (currently at 2.85%). It is a fine line though, with 13 out of 25 economists polled by Bloomberg forecasting no change, while the remainder forecast a 5-15bp reduction.
• April's monthly run of industrial production, retail sales and fixed asset investment data is also out today. Not surprisingly, market expectations are fairly downbeat. IP is seen +0.5% YoY versus +5.0% previously, with retail sales seen -6.2% YoY (-3.5% YoY previously).