Two weeks ago we showed something very disturbing (something even the IMF is now figuring out): global trade is grinding to a halt…

… and in dollar-denominated cases, has even gone into reverse.

Nowhere has this trend been more visible than in the IMF is now figuring out, growing at 7% in 2011, has nearly halved its growth rate, and in 2016 global commerce is expected to rise at the slowest pace since the financial crisis.

Overnight we got another acute reminder of just who is lying hunched over, comatose in the driver's seat of global commerce: the country whose July exports just crashed by 8.3% Y/Y (and down 3.6% from the month before) far greater than the consensus estimate of only a 1.5% drop, and the biggest drop in four months following the modest June rebound by 2.8%: China.

It wasn't just exports, imports tumbled as well by 8.1%, fractionally worse than the -8.0% consensus, and down from the -6.1% in June as China's commodity tolling operations are suddenly mothballed.

Goldman breaks down the geographic slowdown:

• Exports to the US contracted 1.3% yoy, down from the +12.0% yoy in June.
• Exports to Japan fell 13.0% yoy in July, vs -6.0%yoy in June
• Exports to the Euro area went down 12.3% yoy, vs -3.4% yoy in June.
• Exports to ASEAN grew 1.4% yoy, vs +8.4% yoy in June
• Exports to Hong Kong declined 14.9% yoy, vs -0.5% yoy in June.

Slower sequential export growth likely contributed to the slowdown in industrial production growth in July. Weaker export growth is likely putting more downward pressure on the currency, though whether the government will allow some modest depreciation to happen remains to be seen.

As CA's Valentin Marinov summarizes:

“the collapse in exports seems to be driven by renewed weakness in the EU demand. Not great overall and highlights one distinct risk for the global asset markets we have been highlighting repeatedly of late. In particular, we were stressing the link between slowing global trade (both in manufacturing goods as well as commodities) and the recent sharp drop in central bank FX reserves. That drop should over time erode the sovereign demand for stocks and bonds. The resulting imbalance between supply and demand for global stock and bonds is still not fully reflected in equity risk premia (VIX is still quite law) as well as bond term premia (these are still low for the UST). A correction higher, presumably on the back of Fed liftoff, should weigh on a broad range of risk-correlated currencies.”