Via Barclays:
Credit crunch, escalating tariffs, more easing
Moderating April-May data suggest the rise of a “credit crunch” due to various government bodies’ sustained policy tightening, which has started to have a visible effect on the economy. With our theme of moderating growth, tightening regulations and escalating trade tension continuing to play out into H2, we expect more credit defaults and wide risk premiums. We expect further cuts to RRR of 200bp in the coming months and more supportive government policies. While the direct effect of US tariffs on USD50bn of Chinese imports is manageable, we see downside risks from the threat of additional tariffs on USD200bn of imports being implemented sooner than expected.