Chinese growth to improve from now on? - BTMU

Analysts at Bank of Tokyo Mitsubishi explained that we're in the midst of another CNH rates squeeze but at 5.45% today it's minotaur vs. Godzilla (when rates were in triple digits early this year).

Key Quotes:

"Since the on/offshore spot basis wasn't too wide to begin with, we wonder just how many spec positions are there out there to squeeze? For Mr. and Mrs. Chen, if this is how PBOC wants to stage-manage SDR entry so be it: RHS demand won't go away and can wait another week.

This week, policy tea leaves, importantly, appear to be signaling all-in on growth, per the State Council's statement. August Chinese imports surprised on the high side even as Port Hedland iron ore exports hit a record high.

This is old- economy stimulus for China. So it's almost certain reported growth from now on will improve, including perhaps a miraculous turnaround for Liaoning. (Remember, our own growth forecasts for this and next year always include a 1/2 ppt penalty deduction for overestimated growth.)

As soon as the G20 left town, the CFETS Index has fallen a half-point; #gofigure. Our trendline for end-September for CFETS is 93.32. We think the level of CFETS is purposive, not an accident."