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Overnight SHIBOR Goes Whoosh

Tyler Durden's picture




 

Just four words for global liquidity watchers: Overnight and 1-Week SHIBOR.

Overnight... yes, this is a 3% (absolute) increase in Overnight interbank lending rates in one day (or for the purists a doubling in the rate from Friday).

1 Week:

Source: Shanghai Interbank Offered Rate

 

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Mon, 06/20/2011 - 00:02 | 1383834 slow_roast
slow_roast's picture

It's going up so that's bullish.

Mon, 06/20/2011 - 00:06 | 1383865 Thomas
Thomas's picture

Holy shit. During the 2007 mess the Libor rate cracked up by 0.4% overnight and THAT was huge.

Mon, 06/20/2011 - 00:20 | 1383874 HungrySeagull
HungrySeagull's picture

Data, Bridge of the USS Enterprise Saucer Section:

 

"Oh shit"

 

Star Trek Movie some time ago.

 

EDITED ... so much for the damn Boost Phase, now we are in cruise phase.

Mon, 06/20/2011 - 00:12 | 1383877 slow_roast
slow_roast's picture

Each bubble gets larger and more exaggerated it seems.

Mon, 06/20/2011 - 00:53 | 1384002 FEDbuster
FEDbuster's picture

Just had to provide link to the "Bubble Song", the Bernak's ringtone:

http://www.youtube.com/watch?v=vdED3rVgIu4

Mon, 06/20/2011 - 01:02 | 1384032 Barb Dwire
Barb Dwire's picture

you soooo should be on cnbc...

Mon, 06/20/2011 - 01:06 | 1384033 phungus_mungus
phungus_mungus's picture

Technically its a 100% increase over Friday... 

 

Fecal matter hitting the Westinghouse? 

 

Mon, 06/20/2011 - 00:04 | 1383840 Popo
Popo's picture

Well... it certainly isn't inflationary.

Mon, 06/20/2011 - 00:05 | 1383841 baby_BLYTHE
baby_BLYTHE's picture

Troubles a brewin' repaet of 2008... this time coming from Europe (near perfect repeat of Great Depression 1)

Mon, 06/20/2011 - 00:19 | 1383901 Boop
Boop's picture

Deja Vu - eerie...

Mon, 06/20/2011 - 02:09 | 1384151 disabledvet
disabledvet's picture

i liked your new pic.  HOT!

Mon, 06/20/2011 - 00:05 | 1383846 JimBobOMG
JimBobOMG's picture

Is this QE3?

Mon, 06/20/2011 - 00:02 | 1383851 takeaction
takeaction's picture

Am I reading the first graph wrong?  It is not a 3% increase, it is a 3 point increase....which is nearly a 100% increase overnight...right?

Mon, 06/20/2011 - 00:07 | 1383855 slow_roast
slow_roast's picture

If it goes from 3% to 6% that is a 100% increase, but also a 3% increase.

Mon, 06/20/2011 - 00:30 | 1383917 Fancy Bear
Fancy Bear's picture

Oh kids, behavioral science tells us it's a 3% "absolute increase", and a 100% "relative increase."

Mon, 06/20/2011 - 07:40 | 1384390 Urban Redneck
Urban Redneck's picture

nominal might be appropriate than absolute

 

Mon, 06/20/2011 - 02:30 | 1384182 ThoughtCriminal
ThoughtCriminal's picture

lookin at those charts, seems more like 3.924% move (from around 3.031% to 6.955% is a 3.924% increase), meaning more like 130% increase for overnight, similar for 1-week,
just sayin'

Mon, 06/20/2011 - 00:07 | 1383856 Tyler Durden
Tyler Durden's picture

It actually is a 3% increase. Which also is nearly a 100% increase.

Mon, 06/20/2011 - 00:06 | 1383864 takeaction
takeaction's picture

It is both....thanks

Mon, 06/20/2011 - 00:07 | 1383870 Thomas
Thomas's picture

Two mints in one!

Mon, 06/20/2011 - 00:09 | 1383880 SilverIsKing
SilverIsKing's picture

Who's on first?

Mon, 06/20/2011 - 00:49 | 1384001 blindman
blindman's picture


if it is both 3% and 100%, and both are
increases, what is the down side? ( don't
actually try to answer that ).*
also, is a 3% and a 100% increase the same
as 103 "fold" increase? ( same ).*
also, does this development mean that some one,
somewhere, just made enough money to buy a country
and all the people in it? ( same )*.
The Collapse of Nations All By The Hand Of Corrupt Bankers
Bob Chapman
International Forecaster
June 19, 2011
http://www.infowars.com/the-collapse-of-nations-all-by-the-hand-of-corru...

Mon, 06/20/2011 - 01:36 | 1384087 robertocarlos
robertocarlos's picture

3% is the same as 100%. My brain hertz.

Mon, 06/20/2011 - 02:04 | 1384142 blindman
blindman's picture


this might have to do with it?
http://www.ctbto.org/specials/1945-1998-by-isao-hashimoto/
.
check this.
http://theautomaticearth.blogspot.com/2011/06/june-18-2011-monetary-psy-...
...
"The latest Treasury International Capital (TIC) report shows that net inflows into Treasuries increased for the month of April, mainly due to foreign government purchases. So when can we expect all of those "private accounts" to get with the program?

"Outside of equities, official accounts, which include foreign central banks, were the biggest buyers in the month with net inflow into Treasuries of $24.4 billion vs a net outflow from private accounts of $1.0 billion.;

A look at Treasury holdings by nations shows a $7.6 billion rise in mainland China, which is also a positive, to $1.15 trillion and a small decline in Japan to $906.9 billion. UK-based accounts, which are the third largest holders of US Treasuries, shows a $7.8 billion increase to $333.0 billion."

Well, with the rapidly progressing financial troubles of Europe and Japan, I suspect it will not be very long from now. In the meantime, as discussed in Bailing Out the Thimble with the Titanic, the Fed can continue to exert some influence over longer-term rates by selling insurance (IR swaps) on Treasury bonds through primary dealer banks, without any explicit monetization or anyone being the wiser (major investors). Eventually, the time will come when some form of QE3 is necessary, but that time will likely be sometime next year after asset prices have come down significantly. As for Gross, well, I still expect that financial shark to be well-positioned for the long-bond rally when it occurs, and in no small part because of his immensely pubic fear-mongering tactics."
( at link photo of shark jaws here )

Mon, 06/20/2011 - 03:02 | 1384210 robertocarlos
robertocarlos's picture

Good and scary stuff. Especially the Great White.

Mon, 06/20/2011 - 02:14 | 1384153 disabledvet
disabledvet's picture

What's on second?

Mon, 06/20/2011 - 05:59 | 1384321 Zero Govt
Zero Govt's picture

3% is on first, 100% after the interlude (grab your popcorn)

Mon, 06/20/2011 - 00:53 | 1384004 ebworthen
ebworthen's picture

Is that equal to the Doublemint twins?

Mon, 06/20/2011 - 00:06 | 1383852 slow_roast
slow_roast's picture

It is actually hints like this, while the idiots as Marketwatch and on CNBS go on talking about green shoots, that let those who pay a little attention to get short and sit back a little bit until it's impossible to not see the issues at hand.  Get short and wait.

Mon, 06/20/2011 - 00:08 | 1383873 Thomas
Thomas's picture

That's above my threshold of a "hint".

Mon, 06/20/2011 - 00:12 | 1383890 slow_roast
slow_roast's picture

Yes, but it's not headline story material for Marketwatch or MSNmoney so who really cares?  :)

Mon, 06/20/2011 - 01:35 | 1384093 Oh regional Indian
Oh regional Indian's picture

Hah! noice.
ORI

Mon, 06/20/2011 - 00:04 | 1383860 Bansters-in-my-...
Bansters-in-my- feces's picture

Pop-Corn...!!! Pop-Corn...!!!!

Get your Pop-Corn.....!!!!

Mon, 06/20/2011 - 00:24 | 1383919 augie
augie's picture

I'm thinking something stronger. 

Mon, 06/20/2011 - 00:36 | 1383953 DoChenRollingBearing
DoChenRollingBearing's picture

+ 80 proof!

Mon, 06/20/2011 - 00:46 | 1383991 cbxer55
cbxer55's picture

+100 proof.  ;-)

Mon, 06/20/2011 - 01:02 | 1384021 GtownSLV
GtownSLV's picture

180 proof and it will come from a still. The liquor stores will be empty soon enough.

 

Mon, 06/20/2011 - 00:46 | 1383992 augie
augie's picture

it'll be a vueve if we take out that 1252 on the /es.

Mon, 06/20/2011 - 00:57 | 1384009 Ahmeexnal
Ahmeexnal's picture

Redbull & Stroh 80 !!

Mon, 06/20/2011 - 01:39 | 1384095 Oh regional Indian
Oh regional Indian's picture

Mom-corns perhaps?

ORI

Mon, 06/20/2011 - 00:26 | 1383923 The Fonz
The Fonz's picture

commooon baby! Daddy needs an education in another country!

Mon, 06/20/2011 - 00:04 | 1383861 bankonzhongguo
bankonzhongguo's picture

This is all pre-programmed window dressing to otherwise pare down the number of still standing banks - the Alpha Banks. 

More banking chaos means fewer TBTF and thus guranteed survival for those at the center of this global assault on the human spirit.

The race is on to make it to the Basel 3 finish line.

 

Mon, 06/20/2011 - 00:11 | 1383886 Orly
Orly's picture

And isn't it funny how Goldman-Sachs has been greased up for the sacrifice over these past few weeks?

Mon, 06/20/2011 - 00:20 | 1383914 HungrySeagull
HungrySeagull's picture

And the Drums fill the jungle speaking collect the firewood and gather the feasting time.

Mon, 06/20/2011 - 00:23 | 1383929 The Fonz
The Fonz's picture

Man I hope GS hangs, but I have been assuming they wouldn't, too much regulatory capture.

Mon, 06/20/2011 - 00:41 | 1383966 Orly
Orly's picture

Think about it...

Goldman was at the center of the whole mess.  They had people in the Treasury Department, they were called before Congress.  We know the sins of Goldman!  Yeah, that's the ticket...

We demand a public trial!  The SEC has got the beef!

Live!  On TV!  The Trial of the Century!

There's Lord Blankfein doing his best Ollie North, going, "I do not recall that, Mr. Chairman.  I'll have my people..."

Oh, you know the rest.

It was set up this way...

Mon, 06/20/2011 - 01:25 | 1384073 A Nanny Moose
A Nanny Moose's picture

Trial of the Century is fitting for the Crime of the Century...

http://www.youtube.com/watch?v=jon3q6me5Sg

Mon, 06/20/2011 - 01:31 | 1384076 Orly
Orly's picture

You have a Division Bell avatar and you give me Supertramp?

For shame...

Mon, 06/20/2011 - 10:23 | 1384745 HungrySeagull
HungrySeagull's picture

+1

Mon, 06/20/2011 - 01:37 | 1384100 Oh regional Indian
Oh regional Indian's picture

GS Orly? Doubt it somehow. Too many other smaller big fish that need to go first. GS might get a slightly large slap on the wrist, perhaps they'll have to give back some of that TARP generated profit as a fine, but not much more, not yet. I think.

ORI

Mon, 06/20/2011 - 00:17 | 1383905 Cheeky Bastard
Cheeky Bastard's picture

Looks like you got it all figured out.

Mon, 06/20/2011 - 00:10 | 1383868 traknologist
traknologist's picture

Does this mean I won't be able to get gyros from the corner sandwich shop anymore?

Mon, 06/20/2011 - 00:10 | 1383872 Debt Rolling
Debt Rolling's picture

Cash seems to be running out. That would explain the lasting SSE weakness throughout the last month.

Mon, 06/20/2011 - 00:13 | 1383883 TK7936
TK7936's picture

You mean "a over 100 % increase" right?

Mon, 06/20/2011 - 00:13 | 1383893 Lmo Mutton
Lmo Mutton's picture

Silver Bitchez?

Mon, 06/20/2011 - 00:17 | 1383907 Debt Rolling
Debt Rolling's picture

This is -- for now only -- highly deflationary. 

Mon, 06/20/2011 - 08:54 | 1384526 tmosley
tmosley's picture

Not really.  This is like turning down the kitchen faucet to try to stop a flood, a flood that is caused by heavy rains and no roof (ie Bernanke's printing and the dollar peg, respectively).

Mon, 06/20/2011 - 00:17 | 1383894 chump666
chump666's picture

On UK bank news ala Greek partial/full default.  Nice, funding/liquidity blowout till the ECB starts printing into the Eurozone...now watch Germany go into inflation paranoia.

Lets the chaos begin.

 

Mon, 06/20/2011 - 00:16 | 1383903 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

So.... this means... they are tightening up their supply of loans because they'll be less available.  Which means they are trying to control the country's cash supply.  Which means that Chinese inflation will be going... down?  I can't tell - I dont' know all the implications of these things.

 

Mon, 06/20/2011 - 00:18 | 1383910 astartes09
astartes09's picture

So can someone explain what SHIBOR is?  And what this means?

Mon, 06/20/2011 - 00:23 | 1383926 Goldtoothchimp09
Goldtoothchimp09's picture

got google?  takes about 3 seconds

Mon, 06/20/2011 - 02:31 | 1384179 disabledvet
Mon, 06/20/2011 - 00:28 | 1383939 Debt Rolling
Debt Rolling's picture

Libor or euribor for China. 

Or, in other words, the rate at which Chinese banks agree to lend money between themselves. The higher the rate is, the higher the nervosity of these banks. 

A ~7% shibor basically means that cash is very scarce or that various banks are in a major danger of default. It is generally caused by rotting lending books. 

Mon, 06/20/2011 - 00:31 | 1383946 astartes09
astartes09's picture

Thanks!  I knew of SHIBOR, but didnt really know what this signal meant.

Mon, 06/20/2011 - 00:35 | 1383947 WaterWings
WaterWings's picture

+1

That was nice and concise.

Mon, 06/20/2011 - 00:34 | 1383956 Boop
Boop's picture

Nervosity - nice coinage.

Mon, 06/20/2011 - 08:39 | 1384480 ViewfromUnderth...
ViewfromUndertheBridge's picture

and if you look at SHIBOR trends...

http://www.shibor.org/shibor/web/ShiborJPG_e.jsp

you will see that this takes us back towards December 2010...anyone know what the story was then?

Mon, 06/20/2011 - 00:35 | 1383948 TempFlashback
TempFlashback's picture

Shibor (Shanghai Interbank Offered Rate) is calculated, announced and named on the technological platform of the National Interbank Funding Center in Shanghai. It is a simple, no-guarantee, wholesale interest rate calculated by arithmetically averaging all the interbank RMB lending rates offered by the price quotation group of banks with a high credit rating. Currently, the Shibor consists of eight maturities: overnight, 1-week, 2-week, 1-month, 3-month, 6-month, 9-month and 1-year.

 

http://www.shibor.org/shibor/web/html/index_e.html

 

Mon, 06/20/2011 - 01:48 | 1384119 Libertarian777
Libertarian777's picture

Is shibor yuan denominated loans or USD?

Mon, 06/20/2011 - 02:28 | 1384180 disabledvet
disabledvet's picture

shybor comes in all denominations.

Mon, 06/20/2011 - 00:36 | 1383952 chump666
chump666's picture

china money market/interbank offer rates...good to watch since a fear trade is starting in Europe google UK banks withdraw money from EZ.

Now all we need is Ben 'madman' Bernanke to open up massive USD swaps.  The genius will set oil bid and hit Europe/Germany with stagflation

Mon, 06/20/2011 - 00:41 | 1383980 Orly
Orly's picture

"Standard Chartered is understood to have withdrawn tens of billions of pounds from the eurozone inter-bank lending market in recent months and cut its overall exposure by two-thirds in the past few weeks as it has become increasingly worried about the finances of other European banks.Standard Chartered is understood to have withdrawn tens of billions of pounds from the eurozone inter-bank lending market in recent months and cut its overall exposure by two-thirds in the past few weeks as it has become increasingly worried about the finances of other European banks."

http://www.telegraph.co.uk/finance/financialcrisis/8584442/UK-banks-abandon-eurozone-over-Greek-default-fears.html

Tens of billions in liquidity?  Maybe this is why the GBP is slowly strengthening on the Swissie.

Mon, 06/20/2011 - 01:02 | 1384019 chump666
chump666's picture

Most likely re: GBP/CHF check the close price trade very HFT

doesn't look too good at all, you get this feeling countries are gonna start pulling money out of the EZ.  And Germany is worried the ECB revs up the printing press.  

 

Mon, 06/20/2011 - 03:12 | 1384216 Yen Cross
Yen Cross's picture

 Yes the CHF trade is getting scary. I'm sure BIS had a left hand in that, and STILL does.

Mon, 06/20/2011 - 00:19 | 1383911 I am Jobe
I am Jobe's picture

Party time is all I can say. Let the games begin.Will Ben be addressing this and what will he say.

Mon, 06/20/2011 - 00:24 | 1383921 HungrySeagull
HungrySeagull's picture

Ben? Ben? anyone? Ben?

 

(Beuller)

Mon, 06/20/2011 - 03:30 | 1384229 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Ben can raise rates in 15 minutes...Ben?  Ben!?!?

Mon, 06/20/2011 - 00:22 | 1383922 augie
augie's picture

the rate increases are transitory don't worry.

 

Is your handle from Mrs. Doubtfire? 

Mon, 06/20/2011 - 00:19 | 1383913 RebelYell
RebelYell's picture

you've met me at a very interesting time in my life...  TD

Mon, 06/20/2011 - 00:23 | 1383925 septicshock
septicshock's picture

Will be papered over once again, they have been doing it so long... Its second nature! But first a three thousand point drop!

Mon, 06/20/2011 - 00:27 | 1383930 I am Jobe
Mon, 06/20/2011 - 00:24 | 1383931 deepsouthdoug
deepsouthdoug's picture

The tide is going out again - whose naked this time?

Mon, 06/20/2011 - 00:33 | 1383940 HungrySeagull
HungrySeagull's picture

+1

Never mind the hot wimmen and flopping fishies, start praying for your oncoming death by Tusnami.

 

It's already too late to run for the hills when the sea has run out.

Mon, 06/20/2011 - 10:52 | 1384815 OldTrooper
OldTrooper's picture

A classic clip DV!  Most instructive too.

Mon, 06/20/2011 - 00:28 | 1383932 Silver Bug
Silver Bug's picture

Wow this is insane, that is a parabolic rise in inter bank lending, this is going to have drastic effects tomorrow.

 

http://silverliberationarmy.blogspot.com/

Mon, 06/20/2011 - 00:26 | 1383937 Growyourownfood
Growyourownfood's picture

First casualty will be chinese metal importers, who will be forced to dump massive built up inventory onto the market as they will no longer be able to afford the short term financing that was funding the imports. Metals dump = usd run?

Mon, 06/20/2011 - 00:39 | 1383971 HungrySeagull
HungrySeagull's picture

They dont dare.

If everyone wants USD now, and fast; Gold and Silver is gonna crush the puny who cannot afford it by the time they decide to buy physical.

In other words, don't buy more than you can physically carry while making good time across the hills.

Mon, 06/20/2011 - 02:41 | 1384190 disabledvet
disabledvet's picture

You sound well qualified to be the FRC.  You should put in an application.

Mon, 06/20/2011 - 00:31 | 1383938 snowball777
snowball777's picture

I think I just Schiff'd my pants.

 

Mon, 06/20/2011 - 03:10 | 1384217 Yen Cross
Yen Cross's picture

 Too funny +1   I call it DOO DOO.

Mon, 06/20/2011 - 00:29 | 1383942 slow_roast
slow_roast's picture

Tyler, how does this compare to the similar rise in January??  What makes it different?

 

http://www.zerohedge.com/article/shibor-we-have-liquidity-problem

Mon, 06/20/2011 - 00:50 | 1383995 JLee2027
JLee2027's picture

Same question

Mon, 06/20/2011 - 01:00 | 1384003 Fancy Bear
Fancy Bear's picture

And here:

http://www.zerohedge.com/article/shibor-we-have-big-liquidity-problem

Perhaps this isn't really the end of the world.

Mon, 06/20/2011 - 01:02 | 1384031 Tyler Durden
Tyler Durden's picture

Compare and Contrast. From Morgan Stanley Januay 21:

SHIBOR Surged on Liquidity Shortage

PBoC Open Market Operations: The PBoC made an announcement on Tuesday to suspend bill issuance this week. As regular repo operations were suspended as well, net liquidity injection surged to Rmb249 bn (Exhibit 1) this week (Rmb229 bn of redemption of regular bills and repos plus Rmb20 bn of 7-day repos sold last week). However, if we factor in the latest RRR hike effective January 20 that locked about Rmb350 bn of liquidity, more than Rmb100 bn of net liquidity was withdrawn from the system this week. Compounded with the surge in liquidity demand before the week-long Lunar New Year holiday (Feb 3 – 9), market liquidity became very tight this week, as reflected by the surge in SHIBOR rates, led by the 478 bps increase in the 7-day rate (Exhibit 2).

Re-launch of Reverse Repo: To alleviate the liquidity thirst before the Lunar New Year, it was reported that the PBoC conducted Rmb50 bn of reverse repos on Thursday. Recall that reverse repos were conducted by the PBoC in the week before the Lunar  New Year during 2004 -2007 to inject liquidity. In our view, the re-launch of reverse repos on Thursday after their suspension  for two years indicates the severity of liquidity stretch might be higher than expected. In addition, what’s different this time is that the PBoC conducted the reserve repos with chosen banks instead of through open market operations. This suggests to us that besides the systematic liquidity tightness, some banks may be more vulnerable to continued escalation of tightening measures from the PBoC to control inflation.

What’s next: After taking into account their cost and effectiveness, we believe that RRR may continue to play the key role of liquidity management if the trend of one-way operation (withdrawal) of liquidity management remains intact. Besides the conventional RRR hike, we expect that Dynamic Differentiated RRR will become a primary monetary policy tool in 2011.

 

 

Our take home:

  • The Chinese Lunar New Year happens just once a year, and is thus not a factor.
  • No reverse repos yet: keep an eye out for this from the PBoC. If there is one and Shibor does not drop, oops.
  • RRR and other rate hikes have been largely priced in.

In other words, the set of factors now compared to January, is completely different.

But that said, the central planning cartel most certainly has things under control. That is, until it doesn't.

Mon, 06/20/2011 - 01:10 | 1384051 JLee2027
JLee2027's picture

Thank you

Mon, 06/20/2011 - 01:40 | 1384096 slow_roast
slow_roast's picture

Thanks Tyler, good info.

Mon, 06/20/2011 - 02:49 | 1384199 disabledvet
disabledvet's picture

why else "bailout the all powerful state banking sector" a few week(s?) back?  i say this calls for immediate investigation!

http://www.youtube.com/watch?v=IrBMEVBzh1E&feature=player_detailpage

Mon, 06/20/2011 - 00:38 | 1383959 StreetSmart
StreetSmart's picture

3% is the new 100%.

Now I have to do the friggin math to post this stupid comment...

Mon, 06/20/2011 - 00:40 | 1383965 partimer1
partimer1's picture

This is Chinatown. They have their rules.

The word there is that the Fed will target the CPI to 5%. Zero interest rate for "extended period" till CPI to 5%. Be prepared!

Mon, 06/20/2011 - 00:40 | 1383976 azusgm
azusgm's picture

Where have I recently seen something similar? Could it be the WSJ? Is someone sending a message?

 

http://online.wsj.com/article/SB1000142405270230445150457639400281024654...

 

Mon, 06/20/2011 - 00:47 | 1383983 Orly
Orly's picture

Chinese CPI, US CPI or both at once?

Mon, 06/20/2011 - 00:40 | 1383977 slewie the pi-rat
slewie the pi-rat's picture

i'm sure it could only mean something wonderful!

Ice 9.1?

 

Mon, 06/20/2011 - 00:41 | 1383978 Printfaster
Printfaster's picture

By itself it seems like a non-event.

Shibor shoots to the moon every June.  Call it the Shibor clock.

Mon, 06/20/2011 - 00:49 | 1383990 scratch_and_sniff
scratch_and_sniff's picture

Yip, i give it a day or two to settle.

Mon, 06/20/2011 - 01:12 | 1384047 Tyler Durden
Tyler Durden's picture

What levels did Shibor "shoot" to in the last couple of Junes

Mon, 06/20/2011 - 01:50 | 1384123 scratch_and_sniff
scratch_and_sniff's picture

...it does seem to climb for some reason in and around june.

Mon, 06/20/2011 - 05:17 | 1384296 Mentaliusanything
Mentaliusanything's picture

Balancing the books. Hiding the weiner. papering over the shortfall. plugging the leak.

what ever you call it, just make the books whole or someones getting a cap in the head.

For that I will gladly pay you Tuesday for a hamburger today. 

Mon, 06/20/2011 - 00:46 | 1383981 Zerohedgefunder
Zerohedgefunder's picture

All right so overnight Shibor is skyrocketing. 7 days Shibor is skyrocketting also but much less so. Then ZH just said Libor did not matter anymore as it was cooked to death by the banks so we should consider FRA-OIS rather.

So how does this Shibor spike translate in the European market today?

Mon, 06/20/2011 - 01:00 | 1384013 Itsalie
Itsalie's picture

So why aren't HK and SSEC stocks reacting, big 4 banks BoC ICBC CCB ABC all rather muted today. O/N is well within January's 7.8% peak

Mon, 06/20/2011 - 01:02 | 1384016 toronto1
toronto1's picture

PBOC raise reserve requirement last week, today is the first day bank hand in that money to PBOC.

Mon, 06/20/2011 - 01:02 | 1384030 eurusdog
eurusdog's picture

But sisn't this just happen in Jan '11 as well? It didn't casue the "big one" then.

http://www.zerohedge.com/article/shibor-we-have-liquidity-problem

Mon, 06/20/2011 - 01:07 | 1384035 Tyler Durden
Tyler Durden's picture

Entirely different set of factors. From above:

Compare and Contrast. From Morgan Stanley Januay 21:

SHIBOR Surged on Liquidity Shortage

PBoC Open Market Operations:
The PBoC made an announcement on Tuesday to suspend bill issuance this
week. As regular repo operations were suspended as well, net liquidity
injection surged to Rmb249 bn (Exhibit 1) this week (Rmb229 bn of
redemption of regular bills and repos plus Rmb20 bn of 7-day repos sold
last week). However, if we factor in the latest RRR hike effective
January 20 that locked about Rmb350 bn of liquidity, more than Rmb100 bn
of net liquidity was withdrawn from the system this week. Compounded
with the surge in liquidity demand before the week-long Lunar New Year
holiday (Feb 3 – 9), market liquidity became very tight this week, as
reflected by the surge in SHIBOR rates, led by the 478 bps increase in
the 7-day rate (Exhibit 2).

Re-launch of Reverse Repo:
To alleviate the liquidity thirst before the Lunar New Year, it was
reported that the PBoC conducted Rmb50 bn of reverse repos on Thursday.
Recall that reverse repos were conducted by the PBoC in the week before
the Lunar  New Year during 2004 -2007 to inject liquidity. In our view,
the re-launch of reverse repos on Thursday after their suspension  for
two years indicates the severity of liquidity stretch might be higher
than expected. In addition, what’s different this time is that the PBoC
conducted the reserve repos with chosen banks instead of through open
market operations. This suggests to us that besides the systematic
liquidity tightness, some banks may be more vulnerable to continued
escalation of tightening measures from the PBoC to control inflation.

What’s next:
After taking into account their cost and effectiveness, we believe that
RRR may continue to play the key role of liquidity management if the
trend of one-way operation (withdrawal) of liquidity management remains
intact. Besides the conventional RRR hike, we expect that Dynamic
Differentiated RRR will become a primary monetary policy tool in 2011.

 

 

Our take home:

  • The Chinese Lunar New Year happens just once a year, and is thus not a factor.
  • No reverse repos yet: keep an eye out for this from the PBoC. If there is one and Shibor does not drop, oops.
  • RRR and other rate hikes have been largely priced in.

In other words, the set of factors now compared to January, is completely different.

But that said, the central planning cartel most certainly has things under control. That is, until it doesn't.

Mon, 06/20/2011 - 01:04 | 1384038 mcguire
mcguire's picture

SHIBOR is soaring because of the bitcoin crash... 

http://bitcoin-money.blogspot.com/2011/06/bitcoin-market-hacked-crashes-...

(sarc)

Mon, 06/20/2011 - 01:16 | 1384058 Fancy Bear
Fancy Bear's picture

Bitcoin is worse than stupid.

Mon, 06/20/2011 - 04:30 | 1384273 unununium
unununium's picture

Really? I just discovered bitcoin yesterday and my considered opinion was that it is for real.

The mt gox exchange getting hacked has nothing to do with the p2p currency itself. It is just one of several exchanges.

Mon, 06/20/2011 - 01:20 | 1384066 scratch_and_sniff
scratch_and_sniff's picture

HA HA HA, His previous post was, "BITCOIN, LIKE GOLD, BETTER THAN GOLD?"

Where he drew the conclusion "What are you waiting for? Are you ready to change the economics of the planet and for the first time in history to remove a large part of power to those who have always held and used against the weak? "

The next blog he watches it go to the wall. He said "this is going to be the biggest story ever"...no its not.

Thats some funny shit.

Mon, 06/20/2011 - 01:42 | 1384089 Fancy Bear
Fancy Bear's picture

Yeah, epic fail. I almost want to sign up for blogger just so I can comment with this

http://www.youtube.com/watch?v=rX7wtNOkuHo

Mon, 06/20/2011 - 02:48 | 1384201 disabledvet
disabledvet's picture

that's real money getting obliterated.  how much?  does anyone know?

Mon, 06/20/2011 - 01:15 | 1384053 eurusdog
eurusdog's picture

Great explanation Tyler. Thaks for the update!

Mon, 06/20/2011 - 01:22 | 1384062 natty light
natty light's picture

First casualty will be chinese metal importers, who will be forced to dump massive built up inventory onto the market as they will no longer be able to afford the short term financing that was funding the imports. Metals dump = usd run?

Will there be some bargain prices on silver tomorrow?

Mon, 06/20/2011 - 01:19 | 1384063 bakken
bakken's picture

Is this a serious event??? or Should I just laugh nervously knowing that it is probably just a meaningless change in rates.  or  Should I be slightly anxious knowing that some big time players are getting anxious....

Mon, 06/20/2011 - 01:47 | 1384110 twinshot
twinshot's picture

The RRR hikes are really biting. It is not unusual to see spikes in SHIBOR towards the end of the month as banks scramble for funds to meet ratios. However to see this mid-month is very strange. Anecdotally I know of banks in China who are literally begging customers not to withdraw funds.

Mon, 06/20/2011 - 01:59 | 1384129 Mediocritas
Mediocritas's picture

So here comes the PBoC with its version of the PDCF in 5...4...3...

Meanwhile, seeing as the ECB is utterly useless and the Fed has to do the ECB's job for it, how long is considered minimally acceptable for a gentleman to pause before going back for more banging of Lady QE?

Mon, 06/20/2011 - 02:57 | 1384206 disabledvet
disabledvet's picture

let us look to the history books to guide us:

http://www.youtube.com/watch?feature=player_detailpage&v=iqGLbvSjkuk

Mon, 06/20/2011 - 02:22 | 1384170 chump666
chump666's picture

EZ+China (housing market crunch time) = perfect sh$storm kickin in, right now.  Traders bring up your oil charts...

damn...

Mon, 06/20/2011 - 03:21 | 1384225 Yen Cross
Yen Cross's picture

 death to contango via brent/WTI! Long live texas fracking!

Mon, 06/20/2011 - 03:25 | 1384227 Mediocritas
Mediocritas's picture

This move could be due to the PBoC raising reserve requirements. Reserve deficient banks have to hit the interbank market harder. Should ease pretty quickly.

http://www.dailymarkets.com/stock/2011/06/14/peoples-bank-of-china-raise...

Mon, 06/20/2011 - 04:01 | 1384246 Yen Cross
Yen Cross's picture

And flying Monkeys are decorating spread sheets for me. This trade was(TELE) relegraphed 1.5 months ago!  Pb]BoC has tightend 3 times in a 6 month period, and Australia is in (tin)flation tank. The ACB's have stopped rinse washing... ect....

Mon, 06/20/2011 - 05:05 | 1384284 Yen Cross
Yen Cross's picture

 Also options coming up and below 79.7-50 area digital!  major stops just under 80.

Mon, 06/20/2011 - 06:31 | 1384343 Mr.Kowalski
Mr.Kowalski's picture

WHOH Doggies !!! Now that's scary.  

Mon, 06/20/2011 - 07:10 | 1384369 Ancona
Ancona's picture

Zerohedge must be slipping.

My captcha was ... + 2 = 10

Mon, 06/20/2011 - 10:45 | 1384807 Nolsgrad
Nolsgrad's picture

http://www.shibor.org/shibor/shiborChartShow_e.do?termId=3M

now zoom out, the thing is always crazy.

Mon, 06/20/2011 - 12:07 | 1385027 Winston Smith 2009
Winston Smith 2009's picture

China 1-Day Shibor Rises Most in 5 Months as Redemptions Drop

http://www.bloomberg.com/news/2011-06-20/china-1-day-shibor-rises-most-i...

Mon, 06/20/2011 - 21:04 | 1387252 SilverShortage
SilverShortage's picture

Bitcoin Gets Hacked . another hack attack making headlines, this hit on an internet based currency without a central bank or a country to back it up. here's how it works. you can buy coins through online exchange using a bank transfer, just like you buy your roeuros pounds. over the weekend the biggest exchange that trades bit coins was targeted by hackers sending the coins' value from $17 to less than a single cent

 

http://bitcoin-money.blogspot.com

Do NOT follow this link or you will be banned from the site!