Yuan

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Global Stocks, Futures Dragged Lower By Commodities As Oil Slumps Back Under $37





With just two days left in 2015, the main driver of overnight global stocks and US equity futures remains the most familiar one of all of 2015 - crude oil, which, after its latest torrid bounce yesterday has resumed the familiar "yoyo" mode, and again stumbled dropping below $37 on yesterday's surprising API 2.9 million crude inventory build, as well several more long-term "forecasts" by OPEC members, with Kuwait now budgeting for $30 oil, while Venezuela's Maduro said the oil price fell to $28/bbl and is "headed downward." As a result U.S. futures declined and European stocks fell, extending their worst December drop since 2002 in thin volume on the last full trading day of the year.

 
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China Suspends Foreign Banks' FX Trading As Offshore Yuan Spread Signals Massive Outflows





For the first time since the August collapse, Offshore Yuan is trading over 1000 pips weaker (relative to the USDollar) than onshore Yuan, signalling outflows are once again escalating. Following the chaos in HIBOR money-markets, Offshore Yuan has crashed to 6.5970 (below August spike lows) to the weakest since Dec 2010. On the heels of this recent divergence between on- and off-shore Yuan, China has suspended some foreign banks from FX trading, we suppose to try and stem the capital outflows.

 
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How The U.S. Dollar Spread Across The World





The U.S. dollar is currently accepted as the world’s reserve currency, but it hasn't always been this way...

 
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Frontrunning: December 29





  • The World's Richest People Got Poorer This Year (BBG)
  • Oil hovers near 11-year lows on abundant supply, slowing demand (Reuters)
  • Oil-Producing States Battered as Tax-Gushing Wells Are Shut Down (BBG)
  • A Bold Few Traders Earn Billions Flouting Rivals (WSJ)
  • Islamic State ruling aims to settle who can have sex with female slaves (Reuters)
  • Winter Storm Snarls Republican Presidential Traffic (BBG)
  • Donald Trump Urges Supporters to the Polls (BBG)
 
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Something Just Snapped In Saudi Arabia





Following yesterday's budget (deficit) and the 'sacrifice-the-people's-comfort-for-the-death-of-US-Shale' plan that we detailed here, it appears market concerns about Saudi Arabia's forward-looking health are rising. As Bloomberg reports, USDSAR 12-month forwards jumped 250pts (the most since December 2007) to 725bps (the highest level since March 1999) implying expectations of a looming de-pegged, devaluation. Perhaps just as worrying is this is the same pattern that played out in August as Yuan weakness sparked HIBOR stress, leading to SAR forward weakness and then US equity market collapse.

 
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Offshore Yuan Tumbles As China Devalues Fix To Weakest Since June 2011





On the heels of the collapse in China 'B' shares last night, and continued stress in money-markets, China weakened the the Yuan fix to its lowest since June 2011 tonight. This has sent offshore Yuan spiralling lower breaking above 6.5700 for the first time since trhe August devaluation's collapse. Chinese stocks are on the weaker side, extending losses, and we now await the money-markets to see if this stress is escalating.

 
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Something Just Snapped Again In China - B-Shares Crash Most In 4 Months





Update: *SHANGHAI B-SHARE INDEX PLUNGES 7.8% - MOST IN 4 MONTHS

We have seen this pattern before. In August, the first thing to tumble was Yuan FX rates, then money market rates exploded, and then the stock market tumbled. While it is a little premature, today's sudden plunge in Chinese stocks (as the afternoon session opens) following last week's spike in money market rates following the previous week's non-stop weakness in the Yuan does have a concerning smell of deja vu all over again.

 
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Chinese State Firms' Debt Hits New All Time High, As Profits Tumble





As SOE profits continue to deteriorate at the expense of maximizing jobs and employment (recall the biggest threat facing China is a working class insurrection, or simply said, "lower and middle-class revolution") debt at these same SOEs just hit a new record high: according to the same FinMin numbers, total SOE debt rose by CNY393 billion to CNY78.3 trillion, or over $12 trillion - well above 100% of total Chinese GDP.

 
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Zimbabwe Becomes Beijing's First African Colony With Adoption Of Chinese Yuan





On Monday, Zimbabwe announced that this small, economically devastated country would officially make the Chinese Yuan its legal tender as it seeks to increase trade with Beijing. In exchange for becoming not only a military but also financial colony of China, $40 million of its debts to Beijing would be canceled.  China was delighted it cost it only a $40 million debt write off to acquire its first official African colony.

 
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Global Stocks, Futures Flat As Santa Rally Runs Out Of Steam In Christmas Eve-Shortened Session





After a furious three day "dash for trash", no volume, no breadth, commodity-driven rally, even Santa is now exhausted and overnight US equity index futures were little changed with European and Asian shares mixed. The dollar has declines as gold, silver gain, with WTI initially continuing its recent meteoric rise (up over 8% in the past three days, nearly hitting $38), only to reverse and give up all overnight gains moments ago. Copper falls after Chinese stocks see a second day of weakness, down 0.7% while an unexpected tumble in the USDJPY to 7 weeks lows has dragged the Nikkei (-0.5%) and its futures down.

 
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Brazilians Cancel Vacation Plans As 50 Million Metric Tons Of "Noxious Mud" Turns Ocean Brown





“I was really worried. Everyone who thought of going for the end of the year will have to cancel. Nobody is going to pay 2,000 reais for a holiday package to go to a place where people say the mud is."

 
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The Keynesian Recovery Meme Is About To Get Mugged, Part 2





At the end of the day, the Fed led central bank money printing spree of the past two decades resulted in what is functionally a massive dollar short. Once the Fed stopped expanding its balance sheet when QE officially ended in October 2014, it was only a matter of time before all the “near-dollars” of the world would come under enormous downward pressure in the FX markets. Our Keynesian witch doctors believe that sinking currencies are a wonderful thing, of course. They claim making your country poorer is a good way to stimulate export growth and a virtuous cycle of spending and growth. But there is another thing. It is also a good way to generate capital flight and the ensuing chaos that creates.

 
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30Y Treasury Yield Surges Back Above 3.00% Pre-Fed Hike Levels





Having seen long-bond yields collapse on heavy volume immediately after The Fed's decision last week to hike rates, it appears the "policy error" message was just too much to bear for an un-manipulated market. The last 2 days have seen a very light volume 13bps surge in 30Y yields, now back above the Maginot Line of 3.00% - erasing any "policy error" questions post-Fed... for now.

 
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