Yuan

Another Bubble Bursts - Bitcoin China Crashes Over 30%

First it was Chinese stocks, then Chinese real estate (twice), then Chinese commodities (twice), and now Chinese Bitcoin's bubble has burst as a massive short squeeze on the offshore Yuan combined with comments on 'virtual' capital controls has sparked a bloodbath in the cryptocurrency from 8,896 yuan to 6,101 yuan in the last few hours...a 31% collapse.

Frontrunning: January 5

  • Dollar Posts Biggest Drop Since Trump's Win (BBG)
  • World stocks hit 1-1/2 year high after strong China data (Reuters)
  • Apple pulls New York Times apps in China after government request (Reuters)
  • Macy’s Axes Jobs and Stores, Echoes Kohl’s on Weak Holiday (WSJ)
  • India’s Cash Woes Are Just Beginning (BBG)

Bitcoin Explodes Higher As Chinese Interbank Liquidity Freezes; Overnight Yuan Rate Hits 45%

As one veteran trader noted "something is very broken." After a massive short-squeeze stronger in offshore yuan during the day session, overnight yuan deposit rates have exploded 31.5 percentage points higher to 45% - just shy of the record highs - as China's liquidity crisis is front-and-center. At the same time, coincidence or not, Bitcoin has gone vertical, smashing through previous record highs.

Frontrunning: January 4

  • Trump Tariff on GM Would Violate NAFTA. That May Not Stop Him (BBG)
  • Obama Tries to Save Parts of Health Law Amid GOP Attack (WSJ)
  • Trump Puts Auto Makers, Trade Policy in Spotlight (WSJ)
  • British consumers borrow at fastest rate in 11 years as inflation threat rises (Reuters)
  • Investment banking fees fall 7 percent in 2016 dragged down by equity raisings (Reuters)

Offshore Yuan Soars Most In One Year On Fears Of Capital Controls

Following last night's trial ballon by the PBOC, when the PBOC hinted it was studying possible scenarios of capital outflows and is preparing contingency plans, the Offshore Yuan reacted accordingly, and soared by 0.9% to as high as 6.8950 per dollar as of 7:20pm in Hong Kong. That was the biggest increase on a closing basis since Jan. 11 last year.

Risk On: 2017 Stock Rally Continues As Global Inflation Accelerates

Following another day of upbeat economic data, with growing signs that inflation on both sides of the Atlantic is accelerating, investors rediscovered their faith in the Trumpflation rally, pushing global stocks and US equity futures higher, fuelling a second day of 2017 equity gains ahead of today's release of the Fed's December minutes.

Are Chinese Philosopher Kings Losing Their Yuan FX Religion?

It took a while, but the world are slowly coming to grips with the simple fact the Chinese miracle is built on a pile of debt with only an unconstrained printing press to support it. The danger is obviously that the political establishment in China will be in dire need to distract the hordes of angry masses that are about to lose their life savings.

China Warns May Dump Treasuries To Keep Yuan Stable, Prepares More Capital Controls

Having tried and failed with simple jawboning, China admitted that it has "studied possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans", Bloomberg reported citing sources, and added that "China may further cut U.S. Treasury holdings in 2017 if needed to keep exchange rate stable."