Spot The Non-PBOC Intervention Days

Tyler Durden's picture

For the first time in a week, the PBOC has decided not to intervene in the interbank liquidity market... the result so far... 7-day repo jumped 157bps to 6.5%... yep, clearly the "liquidity crisis" is behind us... as long as China does not "taper" on any given day by doing nothing instead of injecting liquidity.



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Stoploss's picture

Oh. so the Yuan is worthless too...



Cue massive gold import resumation in 3... 2..

disabledvet's picture

great write up today on the payday lenders of China. 30% interest plus fees "and perfectly legal." There is a limit to what the State will allow. Maybe the labor camps are done...but I highly doubt the days of being Xia Fanged are over. Even Deng Xiao Ping himself had to endure it. Those laws are on the books for a reason...more than anything to protect us from ourselves.

zer0concerns's picture

I'm gonna put this up on the big board for everyone to see; learn to stop worrying and love the financial bomb.
My fellow ZH'ers...I am Satoshi!. Whosoever believeth in me shall have eternal, ever-lasting faith and I have given all my begotten BTC to you so that you may live to seek a more perfect faith.

RagnarDanneskjold's picture

Repo rates on the Shanghai Exchange hit 35% last night.

max2205's picture

Just resizing the number of tu hi

disabledvet's picture

I agree. I'm not sure if this is a "decision" by the authorities either. That is a an...assumption...on the part of those who believe one can simply "print" an interest into existence. this may in fact not be true.

realWhiteNight123129's picture

The PBoC coudl very easily pump money if they wanted to. They are pulling the punch bowl which is what central banks are supposed to do. As for interests + principal, those are promisses to repay money, so yes at some point there are too many promises to repay money. As a result either you have bankruptcies or you print money.


ManWithaPlan's picture

So , everyone prints money these days. What's wrong with that? It's not like we are sinking into a hopeless quagmire of death and decay...

bdub2's picture

Dung Plop Wiz

and Yuan Hung Lo could not be reached for comment.

iLiquid's picture

Market rumor in China talked about the PBoC discreetly sterilizing some interbank liquidity yesterday and today without the usual pre-market announcement, hence the spike in repo rates.

Quinvarius's picture

I can't help but wonder if they are doing something to interest rates, which we cannot follow due to our debt crisis, and that will end up screwing US Treasury demand.

orangegeek's picture

lookie what the communists did


fucking communists

realWhiteNight123129's picture

Nope, the PoBC is doing exactly what is needed:Pulling the punch bowl and letting bad borrowers scramble/go bankrupt. In the meantime the savers are enjoying higher short-term rates.

Actually one of the reason precious metals might not be as attractive as before in Yuan is the presence of positive real rates on the short term in China. You have a % points of appreciation against the USD + rates at 6.5%. Cigarette prices are up about 5% this year in USD, so it is likely that rates are positive in real terms in China.

It is a mistake to measure positive 10Y TSY versus official inflation as a measure of real rates. What counts is immediate rates for short period. Gold is a present good with immediate value, no point to measure it with 10 streams of cash flows, but it makes sense to check it against short term rates.

What had crushed Gold was the presence of positive real rates in 1981. However in China there are 110 men for 100 women and a very large portion of Gold consumption goes for jewelry. Jewelry in China and Gold should have a very bright future (no pun intended) given the imbalance ratio men/women. So even with positive real rates, this demand factor might trump other considerations in China.

What has always given value to Gold aside from money is women. And men are ready to spend a lot of Gold/money for women.