China Interbank Market Freezes As Overnight Repo Explodes To 25%

Tyler Durden's picture

It seems liquidity (or counterparty mistrust) is beginning to reach extreme levels in China as the nation's banking system is now quoting overnight repo transactions at 25%. The explosion in funding costs echoes the collapse in trust (and surge in TED spread) among US banks in the run-up to the Lehman bankruptcy. MSCI Asia-Pac stocks are down over 3% with China's Shanghai Composite -2.5% at seven-month lows.

  • China’s 1-day Repo Rate Climbs to Highest Since at Least 2006
  • MNI - CHINA OVERNIGHT REPO FIXING AT RECORD HIGH

China's bond market is also collapsing:

Yield on 3.1% govt bonds due January 2016 jumps 39 bps to 3.749%, biggest rise since notes were issued in January

China this week...

 

US in the run-up to Lehman...

 

Charts: Bloomberg

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ekm's picture

The pyramid scheme is running out of suckers. That's it.

 

A pyramid scheme can only collapse, it cannot unwind

King_of_simpletons's picture

This is the part left out in Keynesian Economics 101 and covered in Austrian Economics 801. A little chapter called "Disaster".

Atlas_shrugging's picture

people.  relax.  trillion dollar coin.  nuff said

markmotive's picture

Say what you will, but Jim Chanos has been raising red flags about China for a long time now.

http://www.planbeconomics.com/2013/05/chinas-actually-gotten-worse-jim-c...

James_Cole's picture

Anyone else watching the freefall in gold/silver right now? Brutal!

e-recep's picture

players are selling paper, going for cash. 

Spider's picture

Well check out US 10 yr and 30 yr jumping by 2+ percent overnight.  Somethings broken...

fonzannoon's picture

nothing is broken spider. we are settling in around 2.5% which is about right based on the pick up in economic growth. EM and high yield may crash, but after a slight selloff in stawks everyone will come in and scoop em up.

thats the meme and get used to it because they are going to beat you over the head with it.

Spider's picture

Its not the absolute level - its the volatility. 

fonzannoon's picture

agreed, and treasury volatility will simmer down around here. other asset classes (pretty much anything else in credit) not so much.

But look at stocks. nice and calm.

I understand the junk. this is giving me an ulcer. 

RuiNsPro's picture

Would this be enough to finally bust the "China" hype?

papaclop's picture

Maybe he meant paper gold. Try and find physical under 1325.

mt paul's picture

silver just went sub 20 $

spinone's picture

But whos going to make all my cheap crap?

Oh regional Indian's picture

Any straight thinker with an eye for history can see all the pieces falling in place for a general clampdown on borders, physical and now electronic that always precede a general break out of hostilities.

Everywhere, ME, Brazil, Japan, China, Fast asleep India, slowly being re-raped Africa.... things are coming to a head.... at some point, internal strife will be given a new bugbear, a furryner, the outsider, the jew, the despot across the border, US vs. Them....

War, it's what for dinner, like or hopefully NOT.

It is a jaggernaut, China too, but more so this slow unfoldment of rage... all manufactured....

Plenty of humans, very little humanity

ori

http://aadivaahan.wordpress.com/2012/03/23/un-holy-smoke-and-biblical-fi...

 

 

Tsunami Wave's picture

So then what are the chances of a bank collapse?  Aside from this looking like LIBOR circa 2008-9, and regional stock markets & currencies dropping (along with all asset classes getting hammered), this makes liquidity issues look like only the start. 

It might be too late for China to do a rate-cut or get anything together to loosen credit/liquidity.

knukles's picture

Whose better at this than I am?
Been sayin' this stuffs gonna happen post haste.

Just you people wait.
Benji screwed the pooch.
World wide economies are sick, sick, sick...
Otherwise wouldn't have kept the Buy & Print open 24/7/365

So all's he's got's left is suppressing rates further, particularly LONG rates (viz Operation Tittytwister) and
Goosing stock prices

And Look what Ben Wrought
Just when you thought it was OK to get your pecker back in that babe again, you find she already gave you AIDS

Fucking Disaster

Mark my words
They're gonna be printing and monetizing everything inanimate till hell freezes over to compensate for this shit.

You ain't seen nothin' yet, folks!

Oh it's crisis time again,
I'm gonna see it,
I can see the look of panic
In your eyes
If the world starts unraveling around us
Benji and the boys
Will print

Until they die

 

La la la la

I can't wait for Maria Buttaroma tomorrow... gonna be a hoot!
But unfortunately, I'll be golfing.
Shucks

LetThemEatRand's picture

The answer my friend, is blowin' in Warren

The answer is blowin' Warren.

-Maria

lewy14's picture

I thought it was Becky, not Maria.

[Anybody done any decent fanfiction on this topic? Who knows it could be the next 50 Shades...]

MisterMousePotato's picture

knukles, you ignorant slut. Everyone knows it's the Print & Buy.

Hulk's picture

Simma Down Now Knukles, you be scarin the childrens...

AR15AU's picture

Amen, brotha...

My first post in years!  And it goes to Knuckles.

CheapBastard's picture

Panic and Print will be their mantra just like last time when Hank P got up there, trembling with quivering voice warning the mushrooom cloud over the financial world if we don't Bail'm out. Then followed four of the most Glorious Banker Bonus years in the history of Mankind....while the rest of the Nation has sunk deeper into recession.

Bankers cannot stand deflation....printing is their lifeblood so QE (or whatever they call it in whatever form) will certainly continue for the next several years...maybe for the rest of my life. Stock markets and the Housing Bubbles will still see a correction but maybe ben can limit it to a 30-40% drop, or less.

kchrisc's picture

Actually it is called the "crackup boom" by Mises. And who says Austrians are boring?!

The expectation of a general progressive upward movement of all prices does not bring about intensified production and improvement in well-being. It results in the "flight to real values," in the crack-up boom and the complete breakdown of the monetary system.

http://mises.org/humanaction/chap17sec18.asp

Strut's picture

It’s about fucking time... Can we get this impending collapse shit underway already? My food stockpiles are nearing their expiration dates.

LetThemEatRand's picture

If the cans are flat, and heavy, and the seams are intact, they are okay.   

Wile-E-Coyote's picture

Yes I read somewhere recently that on a revisit to Scott's Antarctica base camp they found tinned meat that was still edible, though it would have lost some taste and nutrients over time. It is how you store the cans that is important.

MisterMousePotato's picture

There were also bottles of whiskey there, too. I remember at the time reading that they would be put up for auction (with fantasmagorical estimates), but I never heard a word thereafter. Bet those .GOV fuckers drank it all.

Maxter's picture

Average antarctica temperatures are below 0 C.  So I guess that might have helped them a bit with conservation.

zhandax's picture

FIFO,  it's what's for dinner

ironsky's picture

Tell me about. Eating canned carrots with everything.

giggler123's picture

Y'r supposed to be eating it anyway, replacing it with new when eaten.  Don't forget they'll get you with their leaching BPA canned products anyhow so is it really worth it?

mick68's picture

Game of musical chairs between countries with each trying not to be the first one to fall. 

Bangin7GramRocks's picture

Gandolfini was about to blow the lid off the whole scheme so they silenced him. Beat that for a new conspiracy!

Winston Smith 2009's picture

"A pyramid scheme can only collapse, it cannot unwind"

But isn't a collapse just a very, very fast unwind?  Besides, I'm a PhD doctor, Jim, not an economist. -- Ben "Bones" Bernanke

Never One Roach's picture

How do you spell relief?

 

R-O-L-A-I-D-S.

flacon's picture

Johnnie Walker Black Label. 

 

Here's me at my trading terminal. 

http://popsop.com/wp-content/uploads/johnnie_walker_double_black_02.jpg

MisterMousePotato's picture

My mother told me that she actually prefers JW red to black, which makes me wonder. (Doesn't black cost twice as much as red?)

'Course, she lives in Maine, which, because .GOV sells booze, price may be a significant factor. Probably affect my tastes, too.

Wakanda's picture

Left hand for Johnnie Walker - Right hand for buy/sell button

Now thats a system I can understand.  : - >

Martial's picture

Or, what do you call a homo in a wheelchair?

R-O-L-A-I-D-S.