Whatever China is doing to stimulate its economy, it isn't working.
For the second month in a row China's CPI and PPI missed badly, with CPI sliding from 3.3% Y/Y yo just 2.4%, below the expected 2.7%, and the lowest since March of 2019. PPI meanwhile slumped from -3.3% to -3.7%, the lowest gate inflation since early 2016, and a testament to just how much pricing power Chinese companies are losing.
While Chinese 10Y TSY yields initially dipped in kneejerk response, they have since rebounded to up on the day, rising to 2.824%, and close the highest level since February. In recent weeks Chinese yields have been on a tear as it became clear that the PBOC will not pursue a wholesale rate cut despite vowing to do just that during last month's People's Congress.
Bizarrely, Chinese stocks are actually lower on the news - if only for the time being - a shocking and logical response in a world where everything has long since gone upside down.And yesterday the U.S. Bureau of Labor Statistics released:
CPI for all items falls 0.1% in May, as auto insurance and gasoline indexes decline
06/10/2020
In May, the Consumer Price Index for All Urban Consumers fell 0.1 percent on a seasonally adjusted basis; rising 0.1 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy fell 0.1 percent in May (SA); up 1.2 percent over the year (NSA).
