Step aside Ben Bernanke, the PBoC has moved ahead.
The Fed’s announced prospective tapering of QE has been programmed on the latter half of this year and which may totally end in 2014.
But Bernake’s counterpart in China, the PBoC can’t seem to wait, they have began to bleed dry the financial system in order to force out the shadow banks.
From Bloomberg: (bold mine)
China’s benchmark money-market rate climbed to a record as the central bank refrained from using reverse-repurchase agreements to ease a cash crunch in the world’s second-biggest economy.The financing system must “support economic transformation and upgrading in a more forceful way, serve real economy development in a better way, promote domestic demand in a more targeted way and prevent financial risks in a more concrete way,” the central government said yesterday in a statement after a meeting led by Premier Li Keqiang. The central bank did not conduct open-market operations to add or drain funds, though 40 billion yuan ($6.5 billion) was injected via an auction of six-month deposits from the Finance Ministry.
Aimed at the shadow banks?
The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repo rate, fell five basis points to 4.45 percent in Shanghai, according to data compiled by Bloomberg. It jumped a record 51 basis points yesterday and touched an all-time high of 4.71 percent today.Chinese regulators are forcing trust funds and wealth managers to shift assets into publicly traded securities as it seeks to curb lending that doesn’t involve local banks, according to Fitch Ratings.
Interest rates in key global markets have already been in an upside trend even before the "tapering" chatters, and the realized actions by the PBoC and the anticipated actions from the Fed will exacerbate such phenomenon that will percolate into the rest of the world.
In a world addicted to easy money, tightening of the money environment will bring into light the credit risks from heavily leveraged financial system and debt burdened governments. Boom will become a bust.
Caveat emptor
Excellent analysis on the thwarting of the shadow banking system.
ReplyDeleteThe greatest economic event in our current time happend today.
The bond vigilanges called the Interest Rate on the US Ten Year Note, ^TNX, strongly higher to 2.31%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the Steepner ETF, STPP, Steepening. Ultra High Yield Junk Bonds, UJB, and Junk Bonds, JNK, led Aggregate Credit, AGG, strongly lower. Emerging Market Bonds, EMB, International Corporate Bonds PICB, International Treasury Bonds, BWX, traded lower on falling currencies.
Currency traders successfully sold individual currencies short; these included the Brazilian Real, BZF, the Australian Dollar, FXA, the Japanese Yen, FXY, the Swiss Franc, FXF, the British Pound Sterling, FXB, the Euro, FXE, the Canadian Dollar, FXC, and Emerging MarketCurrencies, CEW, causing the US Dollar, $USD, to rise strongly to resistance as seen in the chart of UUP.
World Stocks, VT, led by the the BRICS, EEB, Emerging Markets, EEM, Nation Investment, EFA, and Small Cap Nation Investment, IFSM, traded strongly lower.
The difference between May 24, 2013, and today June 19, 2013, is that credit, currencies, and money died when the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.01%, and today, all fiat investments were put in Liberalism’s coffin, and the age of investment choice is now gone forever.
Today, June 19, 2013, Jesus Christ operating at the helm of the economy of God, Ephesians, 1:10, pivoted the world out of Liberalism and into Authoritarianism. The trade higher in the Interest Rate on the US Ten Year Note, $TNX, to 2.31%, terminated the Banker Regime and its credit, which began as the Creature from Jekyll Island in 1913 with the Federal Reserve Act, and fully actuated the Beast Regime of Revelation 13:1-4, with its manifest as regional governance in all of the world’s ten regions and totalitarian collectivism and debt servitude in each of the world’s seven institutions, instituting the age of diktat.
Jesus Christ completed a large part of the Ron Paul Agenda, He terminated the Fed, he slayed it at the Ben Bernanke news conference today; something much more terrible and terrifying is here now, as the Beast Regime has “the feet of a bear, the mouth of lion, and the coat of a leopard”. With the rise in the Interest Rate on the US Treasury Note to 2.31%, Jesus Christ has birthed the Ultimate Predator. Listen, and understand. That Predator is out there. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until all existing economic and political life is no more.