With all eyes on China's Trade Data (due out shortly), propagandists aplenty are out en masse to explain a) China's slowing economy is a "healthy rebalancing" (in other words, please do not pull your capital, or this will get very serious), b) The Fed should not raise rates (or we will bury them in Treasury selling and force QE4), and c) Credit demand is extremely weak (in other words, no matter what supply is jammed down the banks' throats, it won't reach the real economy).

The PBOC fixed the Yuan massively stronger (+0.28% - the most since Nov 2014)

• *CHINA SETS YUAN REFERENCE RATE AT 6.3231 AGAINST U.S. DOLLAR
• *CHINA STRENGTHENS YUAN FIXING MOST SINCE NOV. 2014

and injects more liquidty:

• *PBOC TO INJECT 40B YUAN WITH 7-DAY REVERSE REPOS: TRADER

After 8 straight days of stronger fixes, On- and Off-shore Yuan is trading back at 2-month highs (having retraced most of the August devaluation) and notably erased all of the spread between the two rates...

Technicians note that CNY has broken below the 50DMA and retraced 50% of the August rally, targeting 6.30 as the next support....

The USD is notably stronger (against Asian FX) once again as Asia opens

*  *  *

As Reuters reports, The Fed just got its marching orders from China...

Now is not the right time for the United States to raise interest rates, given the global economic situation, China's Finance Minister Lou Jiwei said in an interview published in the China Business News on Monday.

Speaking on the sidelines of the annual meeting of the World Bank and International Monetary Fund in Lima, Lou said developed economies were to blame for the global economic malaise because their slow recoveries were not creating enough demand.

"The United States isn't at the point of raising interest rates yet and under its global responsibilities it can't raise rates," Lou was quoted as saying.

The finance minister said the United States "should assume global responsibilities" because of the dollar's status as a global currency.

But for those hoping (and praying) for moar stimulus from China to save the world, think again.As Bloomberg reports, while the QE-esque CAR program announced overnight may free up some lending "room" - there is no end-demand at anything but off-market rates (as the Chinese reach peak debt saturation like the rest of the developed world.

PBOC Academic Warns of Falling Borrowing Demand in Real Economy

Some manufacturers in China are cutting capacity and reducing borrowing demand amid increasing downward pressure in economy, Wang Yong, a professor at the People’s Bank of China’s Zhengzhou training school, writes in Securities Times.

Weak demand in credit market has “severely” affected lendings and some banks are forced to reduce credit lines

Policies should work on both credit supply and demand

Chinese central bank’s expansion in re-lending program could increase commercial banks’ lending ability

Regulators need to build confidence in cos. to boost investment and borrowing demands

Despite The PBOC demanding yesterday that "China's market correction is nearly over" which was 'confirmed' by panic-manipulation in Chinese stocks yesterday...

But are sliding modestly in the pre-open...

• *FTSE CHINA A50 INDEX FUTURES FALL 0.2% IN SINGAPORE
• *CHINA'S CSI 300 STOCK-INDEX FUTURES FALL 0.3% TO 3,420

Earnings expectations continue to collapse...

As SCMP reports, as the authorities on the mainland moved to project confidence in the country's economy and stock markets, investors yesterday picked up on the positive stance and bought shares to move the markets more than 3 per cent higher.

Hopes are high for more official measures to boost the country's economy after the Communist Party said it would be holding a key meeting from October 26 to 29 to map out the 13th five-year plan.

...

A Politburo statement said the plenum would develop a strategy for building a well-off society and set the direction for the nation's socioeconomic development.

...

But analysts said the mini rally would not be sustained without significant policy support in the new five-year plan.

 

"Personally, I do not see much room for further growth in the share market," said Eric Wu, an analyst in Shanghai. "It is crucial to see if this meeting will break through the reform strategies laid out since the plenum in 2012."

...

"We need to see a more detailed ownership reform plan for the state-owned enterprises, or a tax-reduction plan for emerging industries. If neither of the two catalysts comes into being after the party plenum, the current rebound will be small in size and unsustainable," the note said.

ut all the excitement and re-promises from the leadership has done nothing but drive the bloody chinese to relever!!

• *SHANGHAI MARGIN DEBT BALANCE RISES TO ONE-MONTH HIGH
• Balance rose 3%, biggest gain since Dec. 8

And finally, just in case you were still believing the mainstream media mantra that "China doesn't matter" - it does!!

On a side note, Aussie miners are taking it on the chin again (just a shame their rugby team didn't last weekend)

Charts: JPMorgan and Bloomberg