China July CPI ( 1.6% y/y vs. 1.5% expected) and PPI (-5.4% y/y vs. -5.0% expected)

China CPI and PPI for July

CPI 1.6% y/y

• expected +1.5% y/y, prior was 1.4%
• For the m/m, up 0.3%

PPI -5.4% y/y

• expected -5.0% y/y, prior was -4.8%
• For the m/m, down 0.7%

6-year low for the PPI. Deflation very much evident. CPI is still low. Inflation will be not be a factor hindering further stimulus, if the authorities go down that path.

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Yesterday we got the July trade balance data ... with a big plunge in exports on the month. The slide in exports "compounds downward pressure on China's economy and threatens to bring exchange rate depreciation onto the table as a tool to restore competitiveness" says the chief Asia economist at Bloomberg Intelligence, Tom Orlik (bolidng mine).