While it took a few hours for people (and machines) to realize exactly what China did last night, the fallout in risk markets is now clearly evident when a central bank decides enough-is-enough for speculative wealth creation bubble-followers. As we described last night, Chinas tightening has dramatically influenced the carry trade (USDJPY back under 120) and thus global stocks (from Abu Dhabi to Greece), global corporate bonds (all significantly wider) and European peripheral bonds (cracking wider) all face pressure. The beneficiary safe havens so far are precious metals (Gold > $1315) and US Treasuries (30Y at 2014 low yields). For now the mainstream medias narrative is that this oil-driven (which is fantasy as oil prices are up today) - this is the fallout from the marginal removal of $80bn of leverage collateral from the worlds carry trades... First - the winners... and bonds hit low yields of the year... And the damage... USDJPY - carry - and thus Japanese stocks plunged... Chinese investors realized what was going on... European stocks and bonds are dumping And America wakes up to PBOC tightening and good news is bad news... And as a reminder... And * * * But but but - the US is the cleanest shirt and what about Jobs Friday?
Posted on: Tue, 09 Dec 2014 13:41:48 +0000
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