I just posted up the mid-point reference rate for the USD/CNY, showing the People’s Bank of China weakened the yuan for the 9th consecutive day

That's the longest run since forever, or something (well, 2008 anyway)

Overnight we got the credit data out of China, I'll just clarify what it was as a typo on site has it wrong by an order of magnitude; and I'll give a few words on what it means, why its important and its impact on the yuan fix.

This data was expected this week, but the timing was unknown. We got it last night:

October new yuan loans, 513.6bn (a huge miss)

  • expected 800bn, prior was 1050bn (yuan amounts)

Aggregate financing RMB for October, 476.7bn (a huge miss)

  • expected 1050bn, prior was 1302.8bn

Money supply M0 for October y/y: 3.8%

  • expected 3.6%, prior was 3.7%

Money supply M1 y/y: 14.0%

  • expected 11.2%, prior was 11.3%

Money supply M2 y/y: 13.5%

  • expected 3.8%, prior was 3.8%

The bolded items above are the most watched. And of those two, 'aggregate financing' is the most important.

Aggregate financing is the broadest measure of new Chinese credit available.

As you can see, it came in at a big miss on expectations (476.7bn yuan vs 1.05tln expected). In fact, of the Bloomberg survey, it came in under the lowest 'expected' from 25 economists surveyed. That's a big deal. Lowest since July of 2014, too.

What it means is that while the PBOC is doing a lot to make credit available, its not being taken up by investors. Its a familiar story, sort of ... central banks doing their darndest to ease but governments not doing their part on the fiscal front (this is slowly changing). I would argue, though, that the Chinese government is not one of the laggards with fiscal spending. Which is even more worrying given this result.

I'd argue, further, that the weakening of the yuan we are seeing is partly in response to this sort of data ... a 'currency war' argument, if you like.

I'd also argue ... and this is going to be hindsight, which I hate, that the trashing of equity markets we got overnight can be, at least partially, laid at the door of troubling data out of China like this.