Ice-Nine Spreads To Shanghai: Chinese Interbank Liquidity Evaporates

Tyler Durden's picture

Previously we disclosed that FRA-OIS spreads in both the US and Europe have been on a tear as a result of ongoing concerns that European liquidity may be frozen. Then following the previous post we decided to check in on Chinese liquidity. To our lack of surprise we find Chinese availability of unsecured interbank lending has quietly dropped to the second worst of 2011, now that the rate on 7 Day SHIBOR has hit 7.4%, the highest since the spike in early January, and a range that goes back all the way to the August 2007 quant market crash. Keep a close eye on this should Chinese vital interests become impaired and China is forced to dump trillions of money formerly reserved for US Treasurys (and currently held in US-denominated reserves, thus forcing a selling of USD and buying of EUR), to buy European debt, once the next two dominoes, Italy and Spain, fall.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
CPL's picture

That's because they just bought any and all offers in the premarket.  Just look at it.


ridiculious jump on what looks like two buyers.  wonder if they'll dump it all to get credit moving again before the market opens.

oh_bama's picture

Remember there was a post on zero hedge that SHIBOR was at 7% and change early feb? Whata happeneda? NOTHING!


DOn't get excited wihtout anything real!


qussl3's picture

Funny thing is when that happens all the assets running out of the EUR into the USD will ensyure that the Chinese are just pissing in the wind.

GoinFawr's picture

Do you mean 'pissing with the wind at their backs'?

GoinFawr's picture

Anything to get the tanks rollin' again.

SecondComing's picture

Kilgore Trout and Montana Wildhack are pas de deux on that ice, don'tcha know.

Soul Train's picture

equity markets will be toast. Bye bye 200 dma.

HelluvaEngineer's picture

Dunno.  Was thinking of waiting until next week to reload shorts, but might be smarter to step back in this afternoon.  Anyone have a crystal ball handy?

CPL's picture

I wouldn't touch a damn thing.  Weather is looking bad for shorts and longs.  Well, if people actually use stops anymore.


Get the feeling we'll see a huge pop, then a massive drop sometime...yet by some strange coincidence we'll end up flat by the end of the day with 1/10th the usual volume historically


basically it's just another Friday in the new society of grab and spend.

Tense INDIAN's picture

Good Idea...wait for some the dollar...there was a chart by Danerics..showing one last move below last low....we may have that with these last Bailouts...

JW's picture

Having said that Peter Thal Larsen notes - 'For all the talk of another Lehman moment, European banks are a lot less nervous. Just look at interbank rates: '

Paralympic Equity's picture

Tyler, do you think that China will start to buy Greek debt?


There is a rumour that the will end the CNY and USD peg on sunday?

Tyler Durden's picture

There is exactly 0.0001% implied probability this will happen. Which is higher than the 0.000% realized probability this happened the last two times this event was "rumored" to happen.

But anything to push the USD lower, EUR higher...

Paralympic Equity's picture

Thanks for your view,

It seems that today they will say (not do) anything just to keep the markets from crying.


Cassandra Syndrome's picture

But hey who cares in the land of Bloomjerk

U.S. stock-index futures climbed as as investors awaited a report that may show a gauge of leading indicators rebounded.



Paralympic Equity's picture

I am allways surprised on how they explain what is happening.

BTW. good luck to the futures when the U. of Michigan release comes out.

HelluvaEngineer's picture

Vonnie Quinn said that futures are up, indicating that there may be buying at the open, as opposed to every other fucking day.

AldoHux_IV's picture

Trying to take over the world can be a very expensive failure.

Sudden Debt's picture

Don't worry! Benny will save us with his pot of gold!

And if we all put our head in our asses at the same time, everything might pass without anybody noticing.

AldoHux_IV's picture

Only a matter of time when this debt blowsup in their faces-- they should be more concerned with their domestic issues than propping up insolvent nations and institutions, but people have to learn the very hard way. Unfortunately sometimes it takes violent revolutions before those lessons are ever learned and change occurs-- you can't own people through debt that is designed to take they're individual right and sovereignty-- history has proven this to be ill-fated thinking.

Tense INDIAN's picture

So one last DOWN move for the dollar .....

Ted K's picture

Eeh, who cares? The stupid little Chinky cunts will use it as an excuse to invade Europe claiming it's really Tibetan and Han have the right to anything Tibetan.  Then the Chinese Politburo will re-write school textbooks to claim the Eiffel Tower was originally a phallic tool Mao used on his 3 wives in the '60s.  Does anyone really care what these monkeys do???

i-dog's picture

Wow! truly are as moronic as your namesake!

siglo's picture

the above is 1 month not 1 week repo ... arguments still valid ... 6.685%


PulauHantu29's picture

Business INsider just published new photos of China's Ghost Cities...they seem to be multiplying even as fewer and fewer are buying them and most sit empty...spooky:

Marley's picture

Some day, my son, all this will be yours!