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☆ China cuts medium-term lending rates as economy sputters
▼ + stars: | 2023-06-15 | by ( ) www.reuters.com time to read: 1 min

SHANGHAI, June 15 (Reuters) - China's central bank cut the borrowing cost of its medium-term policy loans for the first time in 10 months on Thursday, in line with expectations, as Beijing ramps up stimulus measures to shore up a shaky economic recovery. The People's Bank of China (PBOC) said it lowered the rate on 237 billion yuan ($33.1 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.65% from 2.75% previously. In a Reuters poll of 33 market watchers this week, all respondents predicted a cut to the MLF rate, with 94% of them expecting a 10-bps cut. Reporting Shanghai Newsroom; Editing by Tom HogueOur Standards: The Thomson Reuters Trust Principles.

Persons: Tom Hogue Organizations: People's Bank of China, Shanghai, Thomson Locations: SHANGHAI, Beijing

This week it hit a six-month low on the dollar after surprise cuts to key China rates, putting the gap between 10-year sovereign yields in China and the U.S. at its widest since November. The position, with China's rates below those in the United States , is the reverse of more than a decade of high-growth that saw China paying better yields than markets in the west. "The People's Bank of China's tolerance of currency weakness ... also opens up room for further yuan weakness." Even if the Federal Reserve holds rates steady later on Wednesday, as expected, traders are braced for an extended period of elevated U.S. interest rates and, increasingly, for China to hold rates low or push them even lower. Analysts polled by Reuters expect the PBOC will cut the costs of medium-term loans on Thursday and many market watchers expect a benchmark lending rate cut next week.

Persons: hasn't, Morgan, J.P, Tommy Xie, Kiyong Seong, Winni Zhou, Brenda Goh, Tom Westbrook, Kim Coghill Organizations: Bond, People's Bank, People's Bank of China, Federal Reserve, Reuters, Authorities, OCBC Bank, Societe Generale, Thomson Locations: SHANGHAI, SINGAPORE, China, U.S, Beijing, United States, Asia, Shanghai, Singapore

☆ China central bank seen cutting medium-term policy rate: Reuters poll
▼ + stars: | 2023-06-14 | by ( ) www.reuters.com time to read: +2 min

SHANGHAI/SINGAPORE, June 14 (Reuters) - China's central bank is widely expected to cut the borrowing cost of medium-term policy loans for the first time in 10 months on Thursday, after it lowered two key short-term policy rates, a Reuters poll showed. China remains an outlier among global central banks as it loosens monetary policy to shore up a stalling recovery but further rate cuts will widen the yield gap with U.S. assets and risk greater outflows. The MLF rate serves as a guide to the benchmark loan prime rate (LPR), and markets usually use the medium-term rate as a precursor to any changes to the lending benchmark. Looking ahead, we expect another 10bp cut in the MLF rate in 3Q23." The PBOC last cut the MLF rate in August 2022 to prop up the broad economy disrupted by stringent zero-COVID measures.

Persons: Ting Lu, Larry Hu, Wu Fang, Winni Zhou, Tom Westbrook, Jacqueline Wong Organizations: People's Bank of China, Nomura, Macquarie, Thomson Locations: SHANGHAI, SINGAPORE, China, lockstep

☆ China's yuan has fallen to the lowest rate since 2014 by one measure, and Beijing is OK with that for now, FX strategist says
▼ + stars: | 2023-06-14 | by ( Jason Ma | ) www.businessinsider.com time to read: +2 min

China's yuan is at the lowest since 2022 by traditional metrics as economic growth has disappointed. But one measure of its real effective rate puts the currency at the lowest since 2014. "So valuation-wise, renminbi is starting to look cheap," a Macquarie foreign exchange strategist said. However, expectations of economic stimulus from Beijing could lift the yuan, Trang added. That's due in part to relatively low volatility in currency markets and the yuan's gradual slope downward, she said.

Persons: renminbi, —, Trang Organizations: Macquarie, Service, China Foreign Exchange Trade, People's Bank of China, Bank of International, Macquarie Group, Bloomberg, Federal Reserve, greenback Locations: Beijing, China

☆ China opens a new era of 'proactive easing' as the economic recovery turns sour
▼ + stars: | 2023-06-14 | by ( Jihye Lee | ) www.cnbc.com time to read: +3 min

SHANGHAI, CHINA - NOVEMBER 04, 2022: Buildings at Lujiazui Financial District are illuminated to celebrate the opening ceremony of the 5th China International Import Expo (CIIE) on November 4, 2022 in Shanghai, China. Vcg | Visual China Group | Getty ImagesStock Chart Icon Stock chart iconPointing to soft economic figures from China, including credit data, Citi economists said "stimulus seems to be underway with the weak readings." Barclays economists, writing in a Tuesday note titled "Entering a rate cut cycle," predict China will deliver a cut for every quarter until early 2024. China's central bank controls the benchmark one-year lending and deposit rates, which affect the borrowing costs for banks, businesses and individuals across the country. Mizuho Bank's Head of Economics and Strategy for Asia Vishnu Varathan argued that the latest actions from China's central bank "does not cut it."

Persons: 50bp, Jian Chang, Goldman Sachs, Hui Shan, Asia Vishnu Varathan Organizations: Lujiazui Financial, 5th China, Visual China, Getty, Citi, Barclays, Bank's, Economics Locations: SHANGHAI, CHINA, Shanghai, China, Asia

The pan-European STOXX 600 index (.STOXX) closed 0.6% higher, tracking the global market rally. The European Central Bank will hold its policy meeting on Thursday, where it is expected to hike rates by another 25 basis points to tame stubborn inflation. Industrial metal prices rose after the People's Bank of China (PBOC) lowered a short-term lending rate for the first time in 10 months to prop up risk sentiment. Meanwhile, German consumer prices, harmonised to compare with other European Union countries, rose by 6.3% on the year in May, data showed. Shares of Admiral (ADML.L) slid 5.1% after traders said Citi downgraded the British motor and home insurer to "sell."

Persons: Steve Sosnick, Antonio Villarroya, Richemont, Denmark's, Shreyashi Sanyal, Siddarth, Rashmi Aich, Richard Chang Organizations: Miners, Citigroup, Reserve, Interactive Brokers, Traders, European Central Bank, Santander CIB, People's Bank of China, Union, Bank of England, Denmark's Maersk, Nvidia, Citi, Thomson Locations: China, U.S, South Korea, Denmark, Swedish, Bengaluru

The pan-European STOXX 600 index (.STOXX) rose 0.3%. The rate-sensitive tech sector index (.SX8P) added 1.6%, while miners (.SXPP) jumped 1.8% to a seven-week high. Industrial metal prices rose after the People's Bank of China (PBOC) lowered a short-term lending rate for the first time in 10 months to prop up risk sentiment. Embracer (EMBRACb.ST) jumped 5.2% to the top of the STOXX 600, after the Swedish games group announced a restructuring programme to slash costs and investments, including development of new products. Shares of Admiral(ADML.L), meanwhile, slid 6.1% to the bottom of the STOXX 600 after traders said Citi cut its rating on the British motor and home insurer to "sell."

Persons: Stuart Cole, Shreyashi Sanyal, Rashmi Aich Organizations: Miners, U.S . Federal, People's Bank of China, Equiti, Traders, European Central Bank, Union, Nvidia, Citi, Thomson Locations: China, Swedish, Bengaluru

"The central bank's rate cut decision was not a complete surprise to the market," said Ken Cheung, chief Asian FX strategist at Mizuho Bank. Further interest rate cuts in China would only widen the yield gap with the United States, even if the Fed pauses this week, sending the yuan lower and accelerating capital outflows. Tuesday's rate cut suggests policymakers are increasingly worried about the health of China's recovery, traders and analysts said. Bloomberg reported on Tuesday, citing unnamed sources, that China was considering at least a dozen stimulus measures including cuts to interest rates to support areas such as real estate and domestic demand. "There could be another RRR or policy interest rate cut in Q4, depending on the economic outcome over the next several months."

Persons: Ken Cheung, Yi Gang, Cheung, Marco Sun, Frances Cheung, Goldman Sachs, Winni Zhou, Tom Westbrook, Sam Holmes, Jacqueline Wong Organizations: People's Bank of China, Mizuho Bank, MUFG Bank, Bloomberg, OCBC Bank, Thomson Locations: SHANGHAI, SINGAPORE, China, United States, outflows

☆ Morning Bid: China steals the show before US inflation
▼ + stars: | 2023-06-13 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Sonali DesaiThe People's Bank of China (PBOC) managed to liven up the wait for Tuesday's highly anticipated U.S. consumer price inflation (CPI) data by lowering a short-term lending rate for the first time in 10 months. Several analysts had been expecting a cut to the one-year medium-term lending facility rate on Thursday, when the PBOC is widely expected to roll over maturing loans. The move had little broader impact on markets in the run-up to tonight's U.S. CPI release and this week's major central bank decisions. Europe's calendar highlights include UK employment data, Germany's ZEW survey for June and final May inflation data, and Bank of (BoE) Governor Andrew Bailey's parliamentary testimony. In the U.S., CPI data is likely to dominate market interest and factor into the Federal Open Market Committee's (FOMC) deliberations as it begins a two-day meeting.

Persons: Sonali Desai, Tuesday's, SoftBank Group's, BoE, Andrew Bailey's, BoE policymaker Catherine Mann, Bailey, CPI BoE Governor Bailey, ECB's Pablo Hernandez de Cos, Andrea Enria, FOMC, Christopher Cushing Organizations: People's Bank of China, U.S, CPI, U.S ., Intel, Reuters, Bank of, bps, Federal, Reuters Graphics Reuters, Economic, Thomson Locations: Asia, U.S . Federal, U.S

☆ China cuts short-term borrowing costs as economy slows
▼ + stars: | 2023-06-13 | by ( ) www.reuters.com time to read: +4 min

SummarySummary Companies PBOC lowers 7-day reverse repo to 1.9% vs. 2.0% prev. The People's Bank of China (PBOC) cut its seven-day reverse repo rate by 10 basis points to 1.90% from 2.00% on Tuesday, when it injected 2 billion yuan ($279.97 million) through the short-term bond instrument. "The central bank's rate cut decision was not a complete surprise to the market," said Ken Cheung, chief Asian FX strategist at Mizuho Bank. Tuesday's rate cut suggests policymakers are increasingly worried about the health of China's recovery, traders and analysts said. "However, the market is expecting the PBOC to cut the policy rate further.

Persons: 10bp, Ken Cheung, Yi Gang, Cheung, Marco Sun, Frances Cheung, Julian Evans, Pritchard, Winni Zhou, Tom Westbrook, Kim Coghill, Sam Holmes Organizations: People's Bank of China, Mizuho Bank, MUFG Bank, OCBC Bank, Capital Economics, Thomson Locations: SHANGHAI, SINGAPORE, China, United States, outflows

☆ China's central bank cuts key short-term policy rate for first time since August
▼ + stars: | 2023-06-13 | by ( Jihye Lee | ) www.cnbc.com time to read: +1 min

The People's Bank of China (PBOC) building in Beijing on Dec. 15, 2022. The People's Bank of China on Tuesday cut a key short-term policy rate as it deals with disappointing economic data in the country after a Covid-19 reopening failed to gain momentum. The PBOC cut its seven-day reverse repurchase rate by 10 basis points from 2% to 1.9%, according to a central bank release, injecting 2 billion Chinese yuan ($279.97 million) through its seven-day repos. A repurchase agreement (repo) is a type of short-term borrowing rate. The move comes ahead of the PBOC's medium-lending facility interest rate decision, which is expected to be released on Thursday.

Organizations: People's Bank of China, U.S Locations: Beijing

☆ China slashes interest rates and mulls big stimulus package in bid to revive slowing economy
▼ + stars: | 2023-06-13 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

China just slashed short-term interest rates in its economy to 1.9%. Meanwhile, the government is mulling a big stimulus package to prop up key sectors. Short-term interest rates in China were cut to 1.9% from 2% on Tuesday, according to an announcement from the People's Bank of China, marking the first rate cut from China's central bank since August of last year. China's government, meanwhile, is mulling a hefty economic stimulus package, Bloomberg reported, citing people familiar with the matter. That makes the narrative that China will undergo a huge economic rebound is merely a "charade," according to Rockefeller International chair Ruchir Sharma.

Persons: —, Yi Gang, Ruchir Sharma, Desmond Lachman Organizations: Service, People's Bank of, Bloomberg, uts, Rockefeller International, International Monetary Fund Locations: China, People's Bank of China

☆ China makes surprise rate cut as economic recovery loses steam
▼ + stars: | 2023-06-13 | by ( Laura He | ) edition.cnn.com time to read: +3 min

The rate will drop to 1.9% from 2%, according to the People’s Bank of China. The rate cut reveals “growing concerns among policymakers” about the health of China’s recovery, Capital Economics analysts said on Tuesday. “The … rate cut came earlier and sharper than our and market expectations, highlighting the sense of urgency to alleviate economic momentum and business confidence,” said Becky Liu, head of China macro strategy for Standard Chartered Bank. That rate cut also came as a surprise and followed a week of turmoil in global financial markets triggered by the failure of some regional US banks. In the language of China’s policymakers, that implies a bias towards easing monetary policy, said Larry Hu, chief China economist for Macquarie Group.

Persons: ”, Becky Liu, Zhaopeng Xing, Betty Wang, Yi Gang, Larry Hu, “ Governor Yi Organizations: Hong Kong CNN, People’s Bank of China, Capital, Standard Chartered Bank, PMI, ANZ Research, Macquarie Group, “ Locations: Hong Kong, China

Economists polled by Reuters had expected new yuan loans would jump to 1.6 trillion yuan last month, versus 718.8 billion yuan in April and against 1.89 trillion yuan a year earlier. Outstanding yuan loans in May grew 11.4% on year compared with 11.8% growth the previous month. Household loans including mortgages were up 367.2 billion yuan in May, versus a contraction of 241.1 billion yuan in April. Corporate loans rose to 855.8 billion yuan in May from 683.9 billion yuan in April, central bank data showed. In May, TSF rose to 1.56 trillion yuan from 1.22 trillion yuan in April.

Persons: Zhiwei Zhang, Yi Gang, Nomura, TSF, Qiaoyi Li, Judy Hua, Kevin Yao, Jacqueline Wong Organizations: People's Bank of China, Reuters, PMI, Capital, Analysts, U.S, Thomson Locations: BEIJING, Shanghai, Beijing, U.S . Federal, TSF

[1/2] The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 9, 2023. Wall Street futures were up, pointing to another session of gains after the S&P 500 rose for the fourth week in a row last week. "Obviously if we have a big negative surprise on inflation and inflation comes in much hotter than expected, that is going to challenge central banks and the Fed in its 'pause' strategy," he said. Money markets are pricing in around a 75% chance of the Fed keeping rates steady, and a 25% chance of a 25 basis points rate hike, according to the CME FedWatch tool. The European Central Bank is expected to raise rates by 25 basis points on Thursday.

Persons: Europe's, Samy Chaar, Lombard, Elizabeth Howcroft, Sharon Singleton, Chizu Organizations: REUTERS, U.S, CPI, Fed, U.S . Federal Reserve, European Central Bank, Wall, Nasdaq, Investors, Reserve Bank of Australia, Bank of Canada, Bank of Japan, People's Bank of China, Brent, . West Texas, Thomson Locations: Frankfurt, Germany, China, U.S, Europe, Hong Kong

BEIJING, June 9 (Reuters) - China's factory gate prices fell at the fastest pace in seven years in May and quicker than forecasts, as faltering demand weighed on a slowing manufacturing sector and cast a cloud over the fragile economic recovery. "The risk of deflation is still weighing on the economy," said Zhiwei Zhang, chief economist at Pinpoint Asset Management, in a note. China's economy grew faster than expected in the first quarter, but recent indicators show demand is rapidly weakening with exports, imports and factory activity falling in May. Food price inflation, a key driver of CPI, slowed to 1.0% year-on-year from 2.4% in the previous month. On a month-on-month basis, food prices fell 0.7%.

Persons: Zhiwei Zhang, Julian Evans, Pritchard, Dan Wang, Joe Cash, Sam Holmes Organizations: National Bureau of Statistics, Australia, Reuters, Capital Economics, Hang Seng Bank China, Bank of China, China's, Thomson Locations: BEIJING, United States, Europe, China

☆ China's central bank upbeat on Q2 GDP growth, confident on 2023 targets
▼ + stars: | 2023-06-09 | by ( ) www.reuters.com time to read: +2 min

Some analysts have predicted the central bank may begin to cut key rates as soon as next week after a flurry of weak data highlighted the fragility of China's economic rebound. "It is expected that year-on-year growth of gross domestic product (GDP) in the second quarter will be relatively high (mainly due to the base effects). The CPI is expected to gradually pick up in the second half of the year and be above 1% year-on-year by December," the PBOC statement quoted Yi as saying. The government has set a modest GDP growth target of around 5% for this year, after badly missing the 2022 goal. Reporting by Ellen Zhang and Ryan Woo; editing by John Stonestreet and Sharon SingletonOur Standards: The Thomson Reuters Trust Principles.

Persons: Yi Gang, Yi, Ellen Zhang, Ryan Woo, John Stonestreet, Sharon Singleton Organizations: People's Bank of China, Group, SAIC Motor Corp, Citibank, Thomson Locations: BEIJING, United States, Europe, Shanghai, China

☆ China's big banks cut deposit rates, signaling monetary easing ahead
▼ + stars: | 2023-06-08 | by ( Evelyn Cheng | ) www.cnbc.com time to read: +2 min

Bloomberg | Bloomberg | Getty ImagesBEIJING — China's largest banks cut interest rates for savers on Thursday in a bid to boost growth in an economy where consumption has been slow to recover. The country's six state-owned commercial banks' websites all showed updated yuan-denominated demand deposit interest rates of 0.2%, down from 0.25% last year, according to CNBC checks. The banks cut rates for other deposit products, including reducing the interest rate for five-year time deposits to 2.5% from 2.65%, according to their websites. The state-run Securities Times reported the deposit rate cuts in the Thursday edition of the newspaper. However, it's not a given that lower deposit rates will translate immediately into greater spending.

Persons: Nomura, Ting Lu, Zhang, it's Organizations: of, Bloomberg, Getty, BEIJING, CNBC, Securities Times, People's Bank of China, China, Management Locations: of China, China, Shanghai

☆ Exclusive: China's state banks told to lower cap on dollar deposit rates -sources
▼ + stars: | 2023-06-06 | by ( ) www.reuters.com time to read: +3 min

SHANGHAI/BEIJING, June 6 (Reuters) - In a rare attempt to bolster China's yuan, a self-regulatory body overseen by the country's central bank has told major state-owned banks to lower dollar deposit interest rates, four people with direct knowledge of the matter said. The buoyant U.S. currency and the Federal Reserve's interest rate hikes have prompted many Chinese companies to hoard dollar receipts. China's central bank said last month it would resolutely curb large fluctuations in the exchange rate and study the strengthening of self-regulation of dollar deposits. China's central bank has so far appeared calm after the yuan breached the psychologically important 7 per dollar level in May. During previous rounds of depreciation, the central bank has sent verbal messages against one-way bets on the yuan.

Persons: Sumeet Chatterjee, Louise Heavens, Mark Potter, Alexander Smith Organizations: Reuters, People's Bank of China, Shanghai, Thomson Locations: SHANGHAI, BEIJING, United States, China, Beijing

SHANGHAI/SINGAPORE, June 2 (Reuters) - China's yuan has skidded to six-month lows against the dollar and analysts say it could weaken further as investors fret over a bumpy pandemic recovery in the world's second-largest economy. "The yuan suffers as China's reopening story is less appealing than before, and there is no sign of further stimulus," said Gary Ng, senior economist for Asia Pacific at Natixis. "A weaker currency at the current juncture can help export performance, especially as global trade is shrinking this year." "A weaker yuan helps exporters when they convert the dollar receivables to yuan," said Barclays' FX strategist Lemon Zhang. A weaker yuan might also temper deflationary pressures being seen in parts of the economy due to weak domestic demand.

Persons: Gary Ng, Alvin Tan, Tan, Tommy Wu, Lemon Zhang, Serena Zhou, Winni Zhou, Brenda Goh, Tom Westbrook, Kim Coghill Organizations: Asia Pacific, Reuters, People's Bank of China, Asia FX, RBC Capital Markets, Barclays, FX, Mizuho Securities, Thomson Locations: SHANGHAI, SINGAPORE, United States, Natixis, Asia, China, Shanghai, Singapore

☆ China holds lending rates steady; cautious on weak yuan, capital outflow risk
▼ + stars: | 2023-05-22 | by ( ) www.reuters.com time to read: +3 min

Earlier in the day, China's one-year loan prime rate (LPR) was kept at 3.65% and its five-year LPR was unchanged at 4.30%. In a Reuters poll of 26 market watchers conducted last week, 23 predicted no change to the rates for this month. "Within monetary policy, symbolic measures such as a reserve requirement ratio (RRR) cut are more likely than policy rate cuts this year given the already wide U.S.-China interest rate differential and RMB depreciation pressure." The steady LPR fixings also came after the PBOC rolled over maturing medium-term lending facility (MLF) loans while keeping the interest rate unchanged last week. "This can probably be achieved without policy rate cuts, which we think the PBOC will try to avoid," they said.

☆ Morning Bid: Not so fast, debt ceiling bulls!
▼ + stars: | 2023-05-22 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Kevin BucklandYou didn't think it would be that easy, did you? Investors are on edge after equities and the dollar got knocked back Friday, when Republican negotiators unexpectedly walked out of debt ceiling talks. Discussions now seem to be back on track, with President Joe Biden due to meet House Republican Speaker Kevin McCarthy later today. Another potential boost comes from the PBOC's assessment that the fundamentals of China's economic stability and long-term improvement have not changed. Luis de Guindos and Philip Lane are among Lagarde's ECB colleagues on speaking duty today.

May 22 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. The People's Bank of China is expected to keep key lending rates on hold on Monday, as traders in Asia digest the implications of the G7's stance on China and the tense and fluid situation in Washington regarding the U.S. debt ceiling standoff. In their joint communique on Saturday, G7 leaders said they are looking to "de-risk, not decouple" economic engagement with China. Wider market sentiment on Monday could be set by the mood music in Washington around the debt ceiling. On the other hand, Treasury Secretary Janet Yellen reiterated that June 1 remains a "hard deadline" for raising the debt ceiling.

As doubts grow about the strength of its economic recovery, foreign money has left China's markets and the currency has fallen 4% against the dollar since late January. Analysts at Nomura and Societe Generale say the yuan could soon head for 7.3, which as last plumbed in November. Reflecting that, the trade-weighted CFETS basket against which the People's Bank of China (PBOC) manages the currency, has dropped to 99 from 100 in February. THE CHEAP CURRENCYBecky Liu, head of China macro strategy at Standard Chartered Bank, expects the yuan will continue to depreciate. "The interest rate gap remains wide, so many hedge funds continue to use yuan as a funding currency," Liu said.

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