Yuan

Chinese Contagion Risks Surge: Banks' Reliance On Each Other For Funding Hits All Time High

China’s smaller banks have never been more reliant on each other for funding, prompting rating companies to warn of contagion risks in any crisis.  "Contagion risks are definitely rising," according to S&P: "The pace of the development is concerning. If this isn’t stopped in time, the central bank will lose some control and flexibility of its monetary policy."

US Futures, Bonds Rise, Dollar Dips As Fed, BOJ Meetings Begin

If yesterday one could "explain" the overnight stock levitation due to the move higher in crude oil, today there is no such catalyst with WTI down modestly, and yet the broader push higher across European stocks and US equities has reappeared following yesterday's muted close on Wall Street ahead of key central bank data on deck.

Frontrunning: September 19

  • Global Stocks Rise, Buoyed by Commodities (WSJ)
  • For Yellen, a September Fed surprise could close confidence gap (Reuters)
  • Robot detonates New Jersey device in latest bomb discovery (Reuters)
  • Syria Truce Hangs in Balance Amid Attacks, Lack of Aid (WSJ)
  • Merkel’s Party Suffers Worst Berlin Loss of Postwar Era (BBG)
  • China’s Home Prices Rise Most in Six Years as Sales Gain (BBG)

Global Stocks, US Futures Rebound As Oil Rises, Dollar Drops

Stocks across the board, and US equity futures are broadly in the green this morning as markets shrug off the terror-related events in the NYC area over the weekend.  There wasn’t a single positive “reason” for the green price action but fears about the bond “tantrum” appear to be fading while a stronger dollar helped push oil and the commodity complex higher.

Why Beijing Desperately Needs A Recession

Beijing should recognize the mainland economy’s need for a recession now. It really is time to reconsider rustbelt industries and low margin export processing that trades on suppressed wages. Recession is the part of the cycle is where you say, “Ouch, got that wrong somewhere, it seems. Let’s think about this again." But Beijing is furiously pushing back against every natural force that would bring the mainland economy into a long delayed and much needed recession.

US Futures, European Stocks Rebound, Bonds Fall Ahead Of US Data Deluge

The overnight session started with more weakness out of Asia, where chatter that the BOJ may end up doing nothing despite all the trial balloons (as we hinted yesterday), sent the USDJPY sliding, pushing the Nikkei lower, leading to a 7th consecutive decline in the Topix, the longest such stretch since 2014 even though the BOJ is now actively buying a record amount of ETFs. However, the modest dip in S&P futures and European stocks proved too much for BTFD algos, and risk promptly rebounded.

China Floods Economy With Over Rmb 1 Trillion In New August Credit

When one month ago China announced that it had created just Rmb 488 billion in new credit as per its broadest credit aggregation metric, Total Social Financing, there was broad concern that the PBOC had again hit the brakes on the country's rampant credit expansion. Those concerns were more than allayed, however, overnight, when the PBOC released its latest August new credit data, which saw total credit grow by well over Rmb 1 trillion.

Global Market Rout Abates As Bond Selloff Pauses, Oil Rebounds

After a sudden rout in financial markets that wiped $2 trillion in global market cap over the past week showed signs of easing, overnight stocks tried to stage another "BTFD-type" comeback with European stocks climbing for the first time in five days as oil and metals prices gained. S&P futures were modestly in green, although they faded earlier gains, on the back of a slide in the USDJPY which initially spiked to 103.31 only to fade back to the mid 102-range.