According to the latest data released in China, in August the year-on-year growth rate of the broad money supply (M2) was 7.5%, lower than the market’s prior expectation of 7.6%, and further slowed from the previous value of 7.7%. This decline in a key macro financial indicator directly reflects the ongoing downward pressure on the pace of credit expansion.
From a macroeconomic fundamentals perspective, the underwhelming M2 growth signals are far from encouraging. This suggests that, although policymakers have continued to release liquidity support, the effective financing demand from the real economy remains sluggish. The balance-sheet repair process for households and businesses is likely to take a long time; liquidity is being trapped within the banking system rather than being effectively transformed into real-economy momentum, and the clouds of deflationary risk have not yet dispersed.
For global traditional financial markets, the cooling of China’s credit cycle will further weigh on demand for commodities, while also putting pressure on the RMB exchange rate. As expectations for growth in the Asia-Pacific engines cool, it may intensify global risk-aversion sentiment, leading to an even more cautious allocation preference toward non–USD foreign-currency risk assets.
For the crypto asset market represented by $BTC , weak Asian liquidity fundamentals make it difficult to provide any substantial incremental “fresh money.” In the absence of a strong external credit-expansion cycle, the market is highly dependent on games within existing positions. Investors should be alert to the downside risks brought about by delayed global liquidity transmission. #M2MoneySupply #ChinaEconomy #MacroEconomics
From a macroeconomic fundamentals perspective, the underwhelming M2 growth signals are far from encouraging. This suggests that, although policymakers have continued to release liquidity support, the effective financing demand from the real economy remains sluggish. The balance-sheet repair process for households and businesses is likely to take a long time; liquidity is being trapped within the banking system rather than being effectively transformed into real-economy momentum, and the clouds of deflationary risk have not yet dispersed.
For global traditional financial markets, the cooling of China’s credit cycle will further weigh on demand for commodities, while also putting pressure on the RMB exchange rate. As expectations for growth in the Asia-Pacific engines cool, it may intensify global risk-aversion sentiment, leading to an even more cautious allocation preference toward non–USD foreign-currency risk assets.
For the crypto asset market represented by $BTC , weak Asian liquidity fundamentals make it difficult to provide any substantial incremental “fresh money.” In the absence of a strong external credit-expansion cycle, the market is highly dependent on games within existing positions. Investors should be alert to the downside risks brought about by delayed global liquidity transmission. #M2MoneySupply #ChinaEconomy #MacroEconomics