China reported its PMI data earlier tonight and the numbers came in at the lowest level in 9 months. China reported PMI of 48.3 down from 49.2 in May. Anything below 50 indicates an economy which is contracting.

See Stan Druckenmiller in New Interview on China Says ;Nobody’s Ever Had Investment to GDP At 47%’


China GDP numbers continuously slashed

HSBC has cut its 2013 GDP forecast to 7.4 percent from 8.2 percent and its 2014 outlook to 7.4 percent from 8.4 percent.  Barclays Capital, which expects annual economic growth to slow to 7.5 percent in the second quarter, has cut its forecast on the full-year growth rate 7.4 percent from 7.9 percent. Consensus calls for growth of 7.7 percent growth in 2013.

Christiaan Tuntono, research analyst at Credit Suisse has joined the chorus with a note just out stating:

Looking ahead to 2H, we expect a weaker Chinese economy to exert more downward pressure on Hong Kong’s growth. We have revised down China’s 2013 growth to 7.4%, from the previously expected 8%. We think the slowdown should increasingly weigh on the Hong Kong economy through its links in tourism, trade and finance (stock performance). This has made us turn more conservative on our growth expectation this year, prompting us to revise down Hong Kong’s 2013 growth forecast to 3% from 3.2% we expected before.

China Lending Rate Soars

Fears Surge In June Over Anticipated Hard Landing In China

After the PMI data repo rates soared in the world’s second largest economy. According to Reuters:

Trading extended for 30 minutes to let banks borrow money
Banks scale back non-essential business, such as arbitrage
Benchmark 7-day repo rate jumps to highest since Oct 2007
Traders only expected mild PBOC cash injection in near
The overnight repo rate rose a whopping 202 bps to 7.69 percent, 7 day Shibor is up to 8.0750. See chart below for more details. These numbers are frightening and reminiscent of the Lehman Brothers collapse. After the bank declared bankruptcy lending virtually stopped as rates soared. We will have further details in the morning on the latest data from China. For now all eyes are on Shibor.

shibor China

UPDATE: The latest report states one-day bond repurchase rate reached 13.1 percent the highest in recorded history.

UPDATE: Shibor has nearly doubled in just one day below is the final quote for the interbank lending rate.