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Mortgage rate easing, ominous signs for exporters

Officials are giving banks more room to lower mortgage rates by relaxing regulatory controls. We doubt this will be sufficient to put a floor under home sales. But alongside efforts to prop up the renminbi, it does weaken the case for near-term cuts to policy rates. Meanwhile, the PMIs add to growing evidence of a turning point in foreign demand. We think this could be the start of a double-digit contraction in Chinese exports.

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