China’s overseas shipments held up (exports +11.1% YoY in USD terms) despite the stronger yuan and rising trade tensions with the U.S., but it was the imports that stunned many, rising 36.9% YoY in USD terms, slamming the trade surplus well below expectations.

In Yuan terms the spike in imports was just as impressive…

In USD terms, the China trade balance printed $20.34bn, well below the $54.65bn expectation and collapsing from last month.

Perhaps in an effort to show there is no trade war, January exports to U.S. rose 7.5%, but ‘friendly’ imports surged 20.5% on the year.

While coal (colder than normal) and oil imports (record) surged in January more than expected, it is crucial to understand that the Lunar New Year, which began earlier in 2017, may have distorted the data notably.

Nevertheless, stocks extended their losses on the data…

But the big impact is extending the losses from the US session in the Yuan as it crashes 5 handles after the data…

Offshore Yuan is now down over 11 handles on the day and down 1.5% in the last two days.

It would appear all bets are on again for another devaluation.

Today is actually the biggest drop in the Yuan since the Aug 2015 devaluation (and remember what ripples that sent through global markets)