China-China
Kevin tactical research
From currency to credit cycle, it is a key variable that is common to the United States. For the United States, when credit is crunched, it has important implications for growth and inflation. In the United States, which is dominated by direct financing, there is some difference between tight credit-borne routes, observational indicators and economic impacts on China.
Credit-impact pathways: indirect financing has a greater impact on SMEs and residents’ consumer lending than direct financing
The tight credit lines of the current round, which have been accelerated by the risk of small and medium-sized banks, are a priority. Larger enterprises have access to more yuan renminbi in part to hedge loans, and credit margins in direct financing have benefited from some improvement expected from precipitation. SMEs are more dependent on bank loans and may be more vulnerable to this tight credit line. The consumption and housing capacity of the population may be inhibited.
How can credit crunch be observed? Credit tightening has begun and indirect financing is tighter than direct financing
The level of direct financing has been relatively low, credit margins have increased modestly and even are expected to be narrower, but interest rates are high; and bond issues have declined. At the indirect financing level, interest rates for loans have risen, credit card rates have risen to the highest levels in history; business loans have been significantly reduced; and lending standards have been tightened comprehensively and quickly, particularly commercially.
Assets meaning: short-term backlash, medium-term recession, transition to growth units such as Nassak
The tightening of credit that has already taken place may result in moderate and recessionary pressures that will help in falling inflation, which means that the end of the year may be precipitated, but the market is expected to continue to precipitate too much in September. From a configured perspective, short-term risks can be expected to fall, medium-term recessionary transactions and shift to growth units such as Nassak.
From currency to credit cycle, not only is the focus of the current overseas markets in the wake of the United States banking crisis and the key variables that determine the movement of future assets (from tight currency to tight credit: the monthly allocation of overseas assets (2023-4)), it is also the key to determining China’s weak growth and recovery paths, which are presumably moving towards tight credit, and the latter is the ability to enter the credit cycle (currents in the United States cycle from credit cycle). For the United States, when and to what extent credit is crunched, it is important to judge the subsequent recession pressure and the rate of inflation. In addition, for the United States financial system, which is dominated by direct financing, currency-to-credit transmission routes and economic impacts vary from China to China, as well as from credit crunch observations and reference indicators, we will focus here on this analysis.
Credit impact pathways: indirect financing has a greater impact on SMEs and residents’ consumer lending than direct financing
There are two layers of transmission from monetary policy deflation to credit tightening: the tightening of credit access for banks (financial suppliers) in a narrow sense, such as the current exposure of the risk of the AUS bank, whose concern about the state of health of their own asset liabilities may result in “primordial” behaviour and accelerate the tight credit cycle. The second is that the damage to assets or mortgages in the broader business and resident sector (financial demand-side) has resulted in higher premiums for financing, thus increasing the cost and difficulty of obtaining funds, while the economic downturn is expected to reduce the willingness to leverage.
The impact of tight credit on different sectors is also uneven due to different financing channels. In the course of a year-long monetary contraction, credit margins that measure the vulnerability of direct financing have also been high, but are not the current focus, and even some of the expected improvements that have recently benefited from the shift in UNPF policy. By contrast, the tight credit of the current round, which has been accelerated by the risk of small and medium-sized banks, depends on indirect bank financing, may result in greater pressure on sectors and plates that are more dependent on bank lending (especially high-interest financing), such as United States SMEs, commercial estates and residential consumer lending.
The relatively larger financing channels for large enterprises can partially tighten bank lending. The stock data provided by the United States Consortium for 2022 show that large-scale enterprises (29 per cent of total financing) are more than loans (21 per cent) ”. When faced with negative shocks, such as weak bank lending will, large enterprises can obtain financing, including by issuing bonds. In the past, the size of corporate lending has been largely counterproductive, especially during the economic downturn. However, the negative impact of rising financing costs, such as higher interest rates, lower balance sheet quality and collateral value (e.g., real estate), could lead to higher lending and debt financing premiums, reflected in an increased burden of interest and a return of profit margins. The recent quarterly report of the United States Unit shows that interest expenditure/EBIT on the Mark P500 index is again showing signs of recovery, while the EBIT profit rate continues to decline.
Small and medium-sized enterprises (SMEs) are more dependent on bank loans and may be more hit in the tight credit that the current cycle is accelerated by bank risks. Bank loans (29 per cent of total financing and remaining equity financing) remain the main source of credit for exclusive and limited partnerships (more than small and medium enterprises). The Bank’s enhanced debt standards put financial pressure on SMEs, and NFIB statistics show that in March and April more difficult access to credit was an average of 8 per cent for small businesses, a new high after the sub-prime crisis (16 per cent in the financial crisis in 2008).
The consumption and housing capacity of the inhabitants of Brunei may be inhibited. The vast majority of financing in the residential sector depends on bank credit, mainly for housing (72 per cent) and consumer (28 per cent). Credit tightening may therefore inhibit the ability and willingness of the population to access finance. 1) Consumer lending: the relatively short duration of the loan cycle and higher interest rates, so that this part of the high-interest financing under economic shocks is also more likely to be seen first and foremost in the rise in default rates. The relatively weak will of higher-income consumption due to higher consumer lending for low-income people, and higher excess savings surpluses, mean that the current tightening of bank credit could put a clear and even non-linear downturn in United States consumption. 2) Housing loans: in high-interest environments, the capacity of the population to leverage has been curtailed, and the affordability index for housing was recaptured to 98.6 (under 100) in March, which means that middle-income residents are unable to afford home loans. However, a higher level of credit for stock loans shows that the population’s home properties have a relatively large-scale credit risk.
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