China: Stronger-than-expected credit extension in September mainly from higher government bond issuance

September credit data came in above market expectations. The stronger-than-expected credit extension was mainly from higher government bond issuance. The detailed breakdown shows that both household and corporate loan demand remained soft. Both M1 and M2 growth softened from August to September, likely reflecting relatively slower pace of fiscal spending. September total social financing (TSF) flows came in above consensus expectations; after seasonal adjustment, TSF flows rose notably from August to September, mainly on higher government bond issuance, while TSF stock growth edged down year over year. RMB loan stock increased roughly in line with market expectations, with outstanding RMB loan growth edging down; household loan demand remained soft while corporate loan demand was broadly unchanged from a year ago. M1 growth moderated and M2 growth fell in September. Fiscal deposits declined by less than a year ago;