Business

As we just detailed in great depth, China's credit growth is slowing at just the wrong time - as exemplified by last night's economic malaise and bond market weakness - and tonight we are starting to see it ripple through commodity and stock markets...

As we noted earlier, Chinese bonds are breaking key levels as China's credit impulse begins to weigh...

And tonight we are seeing that deleveraging pressure filter through to equity markets...

And even more so in the industrial commodities...

SO WHAT?

Submitted by Gordon Johnson of Axiom Capital

CREDIT LEADS “ALL OTHER” ECONOMIC DATA IN CHINA

China until recently euphoric credit growth, is rapidly grinding to a halt. As we published last week, and a key underpinning of our negative outlook on commodity prices through the remainder of 4Q17 and into 2018, the moderation in China’s credit seen more recently appears to be gaining momentum. The evidence? 

Another day and another Indian inflation reading comes in “hotter” than markets expected. Yesterday, India’s CPI printed at 3.58% for October 2017 - its highest level in seven months - versus the consensus expectation of 3.43%. The September 2017 reading was 3.28%, itself marking a strong rebound from the recent low of 1.46% in June 2017. Market chatter was that the prospect for a rate cut by the Reserve Bank of India (RBI) when it meets on 5-6 December 2017 was fading.

Following last night's dismal economic data, China's 10Y bond yield pushed above 4.00% for the first time since October 2014...

As China's intentional credit slowdown strikes.,,

Additionally, China's yield curve has been inverted for a record 22 days and analysts are warning it is likely to get worse - at least until Chinese authorities are forced to step back in.

Bloomberg provides a breakdown of analysts' comments:

Authored by Axel Merk via Merk Investments,

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