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Markets Turmoil After China Devaluation - Surveying The Damage
US equity markets have given up almost all of yesterday's irrational exuberance ramp gains in a perfect echo of last week's Wednesday/Thursday debacle. Bond yields are plunging - also retracing all of yesterday's losses (with 2Y -5bps since Friday now). Europe is suffering most as EUR strengthens (as it was the most popular carry trade against China), driving USD weakness and sending European stocks lower (DAX is dumping almost 3%).
US equities giving it back...
Bond yields plunging...
European stocks ugly with DAX dumping..
As EUR strengthens on massive carry unwinds...
And finally commodities are seeing Crude and copper crushed as PMs bounce...
Charts:Bloomberg
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apparantly the DAX is still a free and open market as it responds correctly to the china news
Just glad to see PM's holding up in the face of an equity sell-off again, like last week. I see plenty more downside in stocks and hope PM's can hold up in the face of that.
Hi Yo Silver, Beaches!
FX firm Tickmill had an interesting note out today for the clients calling the PBOC a bluff and seeing a continued devaluation for CNY as more and more Chinese will start unloading their cash holdings and invest into PMs, and USD.
The more demand for USD from Chinese means reserves of PBOC will start to decrease dramatically. They would have to start selling their US treasuries. If they do it on open market, then the clearing banks would need to find a massive amount of US dollars to exchange the bonds to USD. This will create a massive demand for USD.
No real alarms sounding in MSM. Business as usual. Some selling but the stick is being taped for later.
Drop the peg. We want to see it!
Not quite...
I'm sure I'm not the only one who will be surprised to see the Guardian say something about it:
http://www.theguardian.com/business/2015/aug/11/china-devalues-yuan-by-2...
No comments about the Yuan being the next reserve currency? crickets?
China on prep for reserve currency: Face Lift for 100 Yuan Bill, New Version to be Released in November
http://article.wn.com/view/2015/08/11/100_yuan_note_will_get_a_facelift_...
Today's PM whack-a-mole session is brought to you by the letter Y and the number 1100
I've been a round for 52 years and never ever have I seen the U.S devalue it's currency. I've watched it uncouple from gold, bail out "too big to fails', buy up shit paper and call it quantitative easing, and many other things but never seen it devalue. At least that's what the teevee told me.
Yeah? I bet 2 yrs ago youda never guessed Bruce Jenner would go full taint either...nobody could write this script..
Actually, Married With Children called it years ago:
https://youtu.be/ADiq-EYObkM
Green by noon.
Confusion reigns- they just haven't gotten the memo from Citadel, yet- BTFD.
This should actually be good for both the US bond and equity markets. Some will say it will hurt corporate profits, but many companies already hedge and companies like Walmart are forced to settle in RMB/YUAN...this will make the imports "cheaper" for the US...not cheap enough since the Consumer is cash & credit poor. But that is main-street, we are speaking Wall-street.
From what I read the Chinese are not THAT concerned with the Yuan becoming the reserve currency. They want convertibility across the globe and they are slowly getting there. This devaluation may be a reaction to financial warfare by the USA as they do not want the Yuan in the SDR ever. By crashing the Chinese stock market at such a critical moment and then the IMF coming out right on cue to declare a one year waiting period, the US gets to kick that can another year. They say they want the Yuan in the SDR just the way Yellen says rates are going up, but its not going to happen. The brainwashed masses will just move on to another patch of the pasture and continue chewing.
So now more planned, unforeseen events start happening ... giving cover to the real agenda.
I swear your honor, I could not see the black swan in the middle of the road (even though I put it there).
transitory
At least the vix is off the lows... for now
Think rinse and repeat; this is all by design. Short Squeeze yesterday and now reloading the short positions on what is actually good news for the US stock and bond market to put another short squeeze. Stay away from the VIX; that is being controlled by the NY FED. --Again, not financial advice; just one crocodile's opinion.
BUY THE DIP...BUY THE DIP; what is good for the bond market in the US will find its way to the equity markets and in short time. This is NOT financial advise - had to add the disclaimer.