The PBOC again raised reserve requirements by 50 bps to 18.5% after Nov bank loans rose by 564b yuan, 64b above expectations and both import and export growth were well above forecasts. This move comes before the all important CPI report tomorrow where an expected rise of 4.7% y/o/y would be the highest since Aug ’08. We can only wait to see if the RR hike precludes a rate hike or will be in addition to one but the CPI figure may be the sole swing factor in determining that. Late yesterday, China said Nov property prices rose 7.7% y/o/y, slightly below estimates and the slowest pace since Nov ’09 but not nearly slow enough to stop further Chinese tightening. Commodity prices are trading higher mostly in response to the strong Chinese data overnight and have shrugged off the RR move.
