Financing Demand Continues to Weaken, Monetary Policy Still Has Room for Easing—Comments on July Financial Data

CICC Fixed Income believes that July financial data generally continued to show weakness, with a notable decline in credit extended to the real economy and economic momentum still in need of improvement. Social financing remained weakly stable, with insufficient real-economy credit serving as the main drag; government bond financing may provide some temporary support in the coming period, but year-on-year social financing growth is likely to continue its weak trajectory. Broad money growth continued to slow, with M2 year-on-year growth easing to 7.7%, reflecting insufficient monetary creation by the real economy. Looking ahead, weak private financing demand may further weigh on social financing, and broad money growth may remain subdued. It suggests attention to the allocation value of ultra-long-term treasury bonds.