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JJCTF - Chart Of The Week: Copper And China's Credit Flows
iPath Bloomberg Copper Subindex Total Return Sub-Index ETN
In this brief note, we present our chart of the week, which shows the relationship between copper prices and Chinese credit dynamics.
Source: Bloomberg
As the chart above suggests, there is a clear positive co-movement between the year-on-year change in the LME copper price and the Chinese credit impulse, which is the second derivative of credit.
Our work shows that the Chinese credit impulse is not only a reliable leading indicator of economic activity, but also of copper consumption and copper prices.