M2 and Lending Steady in May

Three-month rolling M2 growth fell to 3.3 percent. The 12-month growth rate held steady as May 2018 credit growth matched May 2017. The 3-month rolling figure should rise in June as quarter-end lending rises, but will the 12-month growth total rise? One-month M2 in June of 2016 and 2017 was 1.97 and 1.87 percent.

SCMP: China surprises with May slowdown in new loans as risk controls hit lending

Data from the central bank on Tuesday showed banks extended 1.15 trillion yuan (US$179.58 billion) in net new yuan loans in May, less than the 1.2 trillion yuan seen in a poll of Reuters analysts and below April’s 1.18 trillion yuan. Banks extended a record 13.53 trillion yuan in new loans last year, 7 per cent more than the previous record in 2016.

An estimate within 4 percent of the final number is a good forecast. It is more a miss because the bulls may have expected April's RRR cut would boost lending, whereas the bears argue its a defensive measure amid a tightening credit market.