CNH: USD/CNH Ticks Higher, Ignores Firmer Services PMI, Underperforms Asia FX

• April’s PMI services unexpectedly dipped in April in signs that the US tariff war is hurting.
• The CAIXIN PMI services had printed above 51 for six successive months and market expectations were for a continuation of this theme and a print of +51.8.
• April’s result of +50.7 is the lowest since September and could be an early warning sign that the economy is slowing quicker than first thought.
• The government’s official GDP growth forecast of 5% may be under threat and could bring about further policy intervention to support what looks like softening growth.
• The details within today’s release show  a modest uptick in employment from +48.6 to +49.2; yet still in contraction and prices charged relative to last month rose. 

Ben Hunt of Epsilon Theory wrote a thread on X : “It's not the tariffs. It's not the recession. It's not the tax cuts. These are just the catalysts, the vehicles through which the true enemy shows himself.” 

• “I feel as strongly today as I did in 2008 that our true enemy has not yet revealed himself.”
• “I feel as strongly today as I did in 2008 that the ‘normal’ market discourse around recession and jobs and inventories acts as a distraction from the systemic risk that is manifesting itself.”
• “I feel as strongly today as I did in 2008 that to the degree systemic risk is being discussed, it is described as ‘well-contained’ by the US government even though we can all see with our own eyes that it is not contained at all.”
• “In 2008 the true enemy was the over-financialization of the US residential mortgage market, and the catalyst for the true enemy to wreak havoc in the global financial system was a sharp, universal decline in US home prices.”
• “In 2025 the true enemy is the over-financialization of the US Treasury market, and the catalyst for the true enemy to wreak havoc in the global financial system is a sharp, universal decline in the full faith and credit of the United States.”
• “The true enemy is uncompensated risk in the risk-free securities that have been financialized and levered across every substrate of the global system, uncompensated risk that comes from a diminishment of the full faith and credit of the United States.”
• https://x.com/EpsilonTheory/status/1919474733508178055

• The PBOC issued CNY405bn of 7-day reverser repo at 1.5% during this morning’s operations.
• Total maturities today CNY
• Net liquidity withdrawal CNY682bn.
• The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
• The CFETS Pledged Repo Deposit Institutions 7 Day Weighted Average Index is at 1.60% versus close on 30/4 at 1.79%.
• The China Overnight Interbank repo rate is at 1.72%, versus close on 30/4 of 1.78%
• The China 7-day Interbank repo rate is at 1.60%, versus close on 30/4 of 1.95%