China reported June new yuan loans at CNY919.8B vs. CNY910.0B consensus estimates. “While the initial headline prompted a jump in risk, the devil was in the details as the composition of the loans was poor. Medium-to-long term loans were only 30.7% of the total, down from 34% last month, and our EM strategists consequently hold a cautious view on the outlook for China.” Writes Chris Walker, a Research Analyst a UBS.
Investors were clearly disappointed by the lack of urgency stressed by the Fed who, while stressing risks to the downside, did little in the way of signaling further easing. Indeed only a few members expressed the view that further policy stimulus would likely be necessary.