{"id":1508176,"date":"2024-12-16T13:37:30","date_gmt":"2024-12-16T18:37:30","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1508176"},"modified":"2024-12-16T13:37:30","modified_gmt":"2024-12-16T18:37:30","slug":"dire-situation-chinese-bond-yields-hit-record-low-on-retail-sales-big-disappointment","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/dire-situation-chinese-bond-yields-hit-record-low-on-retail-sales-big-disappointment\/1508176\/","title":{"rendered":"“Dire Situation” – Chinese Bond Yields Hit Record Low On Retail Sales “Big Disappointment”"},"content":{"rendered":"

“Dire Situation” – Chinese Bond Yields Hit Record Low On Retail Sales “Big Disappointment”<\/span><\/p>\n

\n

China’s retail sales increased just 3% in November from a year ago, falling short of forecasts for 5% growth by economists surveyed by Bloomberg.<\/p>\n

The weakening in retail sales was surprising following strong sales of home appliances and cars a month ago thanks to government subsidies.<\/p>\n

While sales for those two categories remained strong in November, a number of discretionary goods recorded a slump.<\/p>\n

Cosmetics led the decline with a 26% plunge in sales from a year ago, while those of clothing, jewelry, beverages and tobacco and alcohol also decreased.<\/strong><\/p>\n

<\/a><\/p>\n

The November retail number \u201cwas the big disappointment of the month,<\/strong> as retail sales\u2009.\u2009.\u2009.\u2009came in well softer than both consensus and our forecasts\u201d, said Lynn Song, chief economist for greater China at ING in a research note.<\/a><\/p>\n

The data builds on traders\u2019 disappointment last week when Beijing pledged to boost consumption but failed to offer details<\/strong> on fiscal stimulus.<\/p>\n

The retail-sales data \u201cis a reflection of the dire situation there and how the stimulus efforts have prioritized optics over delivering meaningful economic improvements,\u201d <\/strong><\/em>said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.<\/p>\n

\u201cEven for a tactical recovery, we need more after a series of false starts and the risk of tariffs ahead.\u201d<\/em><\/p>\n

As The FT reports, <\/a>Beijing has struggled to boost confidence against the backdrop of a property slowdown, now entering its fourth year, and bouts of deflation.<\/p>\n

The government unveiled a series of measures to boost stock markets in late September and to refinance local government debt last month.<\/p>\n

Chinese stocks fell on the report and bond yields tumbled to a new record low…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

\u201cThe Japanification of China bonds may be inevitable at some point,\u201d<\/strong> said Stephen Miller, a four-decade markets veteran and consultant at GSFM, calling the recent stimulus a sugar hit.<\/p>\n

\u201cChina\u2019s issues are deep-seated structural issues. You can\u2019t fully rule out the possibility of yields heading toward zero if these issues aren\u2019t addressed,\u201d he said.<\/em><\/p>\n

\u201cBond yields at 0% are a possibility,\u201d <\/strong><\/em>said George Boubouras, head of research at hedge fund K2 Asset Management Ltd.<\/p>\n

He said the central bank will need to take an \u2018anything goes\u2019 approach to stimulus to avoid the economy sliding into a Japan-style balance sheet recession.<\/p>\n

Indeed, China is already showing partial signs of a\u00a0balance-sheet\u00a0recession,<\/strong> said\u00a0Yingrui Wang, China economist at AXA Investment Managers.<\/p>\n

Households and corporations are curbing spending due to their rising debt burden, which has left the central government as a key source of demand, according to Wang.<\/p>\n

China\u2019s recent monetary easing pledges point to a continued decline in bond yields until fundamentals in the economy start to recover. Over recent months, the People\u2019s Bank of China appears to have eased its control on bond yields,<\/p>\n

\u201cWe forecast the 10-year CGB yield to reach around 1.6% by the end of 2025\u201d,<\/strong><\/em> she said.<\/p>\n

The damage to consumer confidence is deep-rooted and will require substantial effort to repair; China has yet to act decisively to stabilize its property market, although recent months have seen a shift in focus.<\/p>\n

The government\u2019s lack of effective action mirrors Japan\u2019s early missteps,<\/strong> risking a prolonged downturn, and with China’s 30Y yield plunging below that of Japan’s, the market is clearly starting to believe the same…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Beijing hasn\u2019t fully absorbed Japan\u2019s lessons:<\/strong> The lack of decisive fiscal action despite pressure from the property market, local government debt, and declining confidence among consumers could worsen China\u2019s economic challenges.<\/p>\n

\u201cThe data show that the recovery in domestic demand has remained sluggish, while the stabilization in industrial production was likely due to some order front-loading ahead of US tariffs and is not sustainable,\u201d said Michelle Lam, Greater China economist at Societe Generale SA.<\/em><\/p>\n

As Mike Shedlock concludes, via MishTalk, <\/a>facing debt deflation, China\u2019s best bet would be to allow more bankruptcies, write down debt, and strengthen the yuan. But it is highly unlikely to do so.<\/strong><\/p>\n

US hypocrites led by then Fed Chair Ben Bernanke pleaded with Japan to do that, then failed to do so at our turn in the Great Recession.<\/p>\n

Lower for longer will suppress the yuan.<\/strong> It\u2019s one way China has of countering Trump\u2019s tariff threats.<\/p>\n

But it\u2019s also counterproductive.<\/p>\n

Lower for longer did not help Japan, and negative yields helped neither Japan nor the EU.<\/p>\n

Unfortunately, the only thing China seems to understand is growth by exports but that means a weaker yuan.<\/p>\n

Even more problematic for Beijing, a huge fight with Donald Trump is about a month away…<\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nMon, 12\/16\/2024 – 08:37<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/economics\/dire-situation-chinese-bond-yields-hit-record-low-retail-sales-big-disappointment<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

“Dire Situation” – Chinese Bond Yields Hit Record Low On Retail Sales “Big Disappointment” China’s retail sales increased just 3% in November from a year…<\/p>\n","protected":false},"author":0,"featured_media":1508177,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1508176","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1508176","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1508176"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1508176\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1508177"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1508176"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1508176"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1508176"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}