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Devaluation Stunner: China Has Dumped $100 Billion In Treasurys In The Past Two Weeks
On August 11, China devalued its currency, and in the subsequent 3 days the onshore Yuan, the CNY, tumbled by some 4% against the dollar. Then, as if by magic, the CNY stabilized when China started intervening massively, only this time not through the fixing, but in the actual FX market.
This means that while China has previously been dumping reserves as a matter of FX policy, after August 11 it was intervening directly in the FX market, with the intervention said to really pick up after the FOMC Minutes on August 19, the same day the market finally topped out, and has tumbled into a correction since then. The result was the same: massive FX reserve liquidations to defend the currency one way or the other.
And yet something curious emerges when comparing the traditionally tight, and inverse, relationship between the S&P and the Treausry long-end: the drop in yields has not been anywhere near as profound as the tumble in stocks. In fact, the 30 Year is wider now than where it was the day China announced the Yuan devaluation.
Why is that?
We hinted at the answer on two occasions earlier (here and here) and yet the point is so critical, and was missed by virtually all readers, that it deserves to be repeated once again: as part of China's devaluation and subsequent attempts to contain said devaluation, it has been purging foreign reserves at an epic pace. Said otherwise, China has sold an epic amount of Treasurys in the past two weeks.
How epic? We turn it over to SocGen once again:
The PBoC cut the RRR for all banks by 50bp and offered additional reductions for leasing companies (300bp) and rural banks (50bp). All these will take effect as of 6 September, and the total amount of liquidity injected will be close to CNY700bn, or $106bn based on today's onshore exchange rate. In perspective, the PBoC may have sold more official FX reserves than this amount since the currency regime change on 11 August.
There you have it: in the past two weeks alone China has sold a gargantuan $106 (or more) billion in US paper just as a result of the change in the currency regime!
But wait, there's more: recall that one months ago we posted that "China's Record Dumping Of US Treasuries Leaves Goldman Speechless" in which we reported that China has sold some $107 billion in Treasurys since the start of 2015.
When we did that article, we too were quite shocked at that number. However, we - just like Goldman - are absolutely speechless to find out that China has sold as much in Treasurys in the past 2 weeks, over $100 billion, as it has sold in the entire first half of the year!
In retrospect, it is absolutely amazing that the 10 and 30 Year Bonds have cratered considering the amount of concentrated selling by China.
But the bigger question is how much more does China have left to sell, if this pace of outflows continues. Here is SocGen again:
From an operational perspective, China's FX reserves are estimated to be two-thirds made up of relatively liquid assets. According to TIC data, China held $1,271bn US treasuries end-June 2015, but treasury bills and notes accounted for only $3.1bn. The currency composition is said to be similar to the IMF's COFER data: 2/3 USD, 1/5 EUR and 5% each of GBP and JPY. Given that EUR and JPY depreciation contributed the most to the RMB's NEER appreciation in the past year, it is plausible that
the PBoC may not limit its intervention to selling only USD-denominated assets.
* * *
China's FX reserves are still 134% of the recommended level, or in other words, around $900bn (1/4 of total) and can be used for currency intervention without severely impacting China's external position.
Should the current pace of liquidity outflows continue, and require the dumping of $100 billion in FX reserves, read US Treasurys, every two weeks this means China has, oh, call it some 18 weeks of intervention left.
What happens when China liquidates all of its Treasury holdings is anyone's guess, and an even better question is will anyone else decide to join China as its sells US Treasurys at a never before seen pace, and best of all: will the Fed just sit there and watch as the biggest offshore holder of US Treasurys liquidates its entire inventory...
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P.F. Chang's ...
(now they're having mega dumps)
Now would be a good time to empty one's bank account if that hasn't happened already...
I'll worry more when the Fed starts selling THEIR inventory of Treasuries......
Dumping treasuries? Say, thats a nice looking stock market you get there, shame if anything happened to it... Hey, look at those nice chemical plants, pity if anything happened.
ZH, if this is true, this is EPIC. The US $ as a reserve currency days are few to come.
What crazy times to live through.
And China's sitting on a pile of GOLD...
DavidC
After the Chinese dump TSYs, it's only an hour until they get the urge to dump more of them.
funny, reminds me of when i was dumping my china small caps back when lithium, solar and oil stocks went bananas. once i started, i dumped it all and made for the exits and never came back. made some great gains. since then they got decimated once the massive fraud was uncovered. oh the days, ha .50 to 3.00 in a matter of day, sometimes hours, even minutes...
edit:fuck china
$100 billion.......No "T", No "Q" ???
Chump change. Hillary has that much lost in the sofa cushions at the "Foundation".
chump change? At that pace they will be divested of all $US treasuries in 6 months
do you beleive the rest of the world will pick up what they see china dumping hand over fist? Or do you think they will join the dumpfest - try to frontrun it even, to get best value.
And if that happens......... Hyperinflation in the u.s.a
Were the 'Rods from God' deployed on Tianjin retaliation for this?
Dumped treasuries? I'll bet they were picked up by mysterious "Caribbean Banking Centers."
Trading their FRNs for gold? Barbarous relic my ass.
But if China is selling, somebody is buying.
Gargantuan $106 billion...
Psss... Nothing that the Bernank or Mr Yellen can't print in a day or two...
MOAR!
'Euroclear' ?
Belgium called. They want their parking spaces back.
Nevermind. NATO's got it covered
Yep! I'm thinking Power Rod!.
After the back 9
Seems like a good strategy. Burn USD to maintain Yuan at acceptable levels until they get reserve status with IMF, then have the market maintain the level for them on back of the new reserve rating.
Double whammy to US no?
So I dunno if Chinas getting done or Chinas doing the doing.
This whole thing has become my favourite spectator sport for sure tho.
Question for the finance guys: do Chinese US Teasury holdings or the renmibi's valuation have a higher correlation with future nuclear payload deposits invested into China's mainland?
This popcorn is getting stale, I think I need to nuke it in the microwave....or soon the back porch.
Tick tock
So when China sells U.S. T's, isn't it the Fed the one who has to buy them back?
If the answer is "yes", then how was the Fed "surprised" that China devalued the yuan against the dollar?
I think the Fed and China collaborated to do just that. It gave the dollar a boost in value against the yuan which was the excuse the Fed needs to not raise rates in September. They know they can't raise the rate even a fraction of a point or their whole 4.5 Trillion dollar book explodes.
They needed a world-wide market reaction to China's moves in order to tank markets enough to keep from having to raise rates and to give them the excuse they've always wanted to print Trillions in QEternity.
via PCR
Their budget deficit is in the red, and their trade and current accounts are in the red. So, Belgium didn’t have the money, and yet, they managed to pick up $141.2 billion in U.S. Treasuries over a three month period. So, where did they get the money?”
http://usawatchdog.com/fed-laundering-treasury-purchases-in-belgium-to-d...
Those chickens are in Belgium not with the FED and they haven't yet come home to roost.
Your calculus appears to exclude reference to these [goose] eggs.
The Fed is not going to raise rates. It has always been a bluff and a highly conditional statement. When they said that the Dow was humming along nicely and Obama had not yet fully wrecked the economy. In the new order even a flat economy is considered a major success.
What a wacky world. The Fed manages the economy with a good bluff. Next they'll be consulting chicken entrails. If you were a friend of The Fed and they let you know in the beginning it was all a bluff, you could make a lot of money.
The Fed may well tell its kin and kith that its a bluff. But only the Fed's piper decides the timing of the bluffs' call. You can be in the know and still lose your great grampappy's fortune
its that kinda knowledge that'd make a pragmatic oligarch foster an alternative to the $US fiat system
Reminds me of that time I put $20 in a slot machine and pushed the button. It started ringing and lighting up! I took my hard earned profits and went home. Ahh...memories.
actually unless you have a mental impediment it's clear to see that China is the one doing the Fucking ...usa .....
I'd say they have a belly full, they are USED2bA Treasuries, no urge to eat more soon when you don't have the
stomach for them.
So who gets forced into buying them? That should make for a hilarious ah ha moment.
Right! The question is: who's buying those treasurie?
Belgium?
Greece has forever debt, they can do it! Isn't this lining up with all the years of the rumors of 401k's and IRA's being forced into buying gov funny paper? Who would have ever seen that coming?
Listen citizen. Do you want 40% of your 401k at retirement or 0% of your 401k at retirement? I'll wait 48 hours for your response. In the meantime, we will vote today to our masters wishes. God Bless America & We Love The Troops!
Right! The question is: who's buying those treasuries?
The Fed of course.
First I am NOT STUNNED at all.
THis will get one hell of a lot more interesting when EVERY CENTRAL BANK, GLOBALLY start todo this...in droves.
I have been writing that the World Central Banks will be divesting of their $12 Trillion in CASH, held in their vaults, for many months.
Just how in the hell do you raise liquidity when your Banks are technically insolvent? You SELL EVERYTHING, even at a discount, to keep that CASH FLOW. It does not matter if they are "income producing". That actually makes them a better sell.
The Chinese are smarter as they seek the exits and their Markets are starved of liquidity.
Wait until BRAZIL starts doing this. Wait until the Japanese, as they collapse, start doing this.
The shitshow has just begun.
And Hyperinflation will make its debut on United States shores. That is when it will be a riotous time. The party will be in full swing.
If you are still clueless by now, and have refused to prepare you are really fucked and there will be no help for you.
If you have had the clue then you already would have exited the Ponzi Game as the music has stopped playing and everyone is scrambling for a chair of comfort...which...we already have.
Laugh as you sit on your Gold and Silver as they are the hard money for the hard times.
As for the rest, if you really pity them, then feed them.
Many are going to die horribly as a result of the folly of the Federal Reserve.
So no...I am not stunned in the slightest. It is working out according to what I've predicted.
$20 Oil in November
$1000 Gold in November
and $10 Silver in Noovember
After November the price of everything just hyperinflates.
First massive deflation followed by a crushing hyperinflation...to be fllowed by another period...a long term period...of deflation as the World suffers a horrible depression which will last for decades...if we do not go to war to kill us all first.
Yeah...That is what the elite do not understand. Nobody survives a Thermonuclear Holocaust. They believe that Nuclear Wars are somehow winnable. What a bunch of psychopathic, maraudering, murderous, and Satanic dipshits.
We are so fucked.
World War 3
Worldwide Depression
You can keep your gold and silver. My two metals will be king {lead and brass}. With my metals, I can have all of the of the other metals I want.
If you can defeat my Flamethrowers, Land Mines, Claymores and Rocket Propelled Grenades. then all of it belongs to you.
If you have not been reading my posts I have used this forum...EXTENSIVELY to educate the people here, how to manufacture these items from household chemicals..
Good luck with your pea shooter. Let me know how they work against armor...YOU FUCKING THIEF.
"Don't shoot!!! Let then BURN!!!"
https://youtu.be/Z5gESVcDSDY?t=4m16s
My favorite scene from, "Saving Pricate Ryan" It demonstrates the affectiveness of a flamethrower against a fortified defense.
They are easy to construct. One pressurized Gas Canister feeding into a canister filled with Napalm.
Yup.
Guns are difficult to acquire in some localities. Knowing how to handle them is prudent; but, acquisition many not be worth the effort.
Improvisation is going to rule the day.
Long tools and chemicals.
Nuthin' to see here in the ol' garage: tools, rope, wire, paint, solvents, fertilizer, petroleum products, bug spray.
Just standard gardening supplies...
I do a little handy work around the house...
Make our own soap...
If you could explain the actual mechanism of hyper-inflation that'd be great.
You need the physical money supply to ramp up off the charts don't you, in order to get hyperinflation. I can't see anyway past unstoppable deflation as bankrupticies accelerate, debts are renegged on, assets are seized (or not depending on the semblance of the rule of law).
In short I can only envisage the destruction of money that will even outpace even those dumb mother fuckers at the Federal Reserve and their printing press. They can print all the money they like but the velocity will be stuck at zero.
Through what channels, what sequence of events does hyperinflation occur?
BOTA...Good reading your question...
In Foreign Central Bank's vaults sits an amazing $12 Trillion of PRINTED US Dollars. (NOT ELECTRONIC...but PHYSICAL)
They will divest of those.
They will play the role of the Weimar Republic peasant.
Yeah...Don't ya worry none. There is always enough fuel...TO GETCHA TO THE CRASH SITE.
Wanna debate God? (Teasing)
My brother from another mother!
After the Chinese dump TSYs, it's only an hour until they get the urge to dump more of them.
What? They must have got the runs or something...THE BANK RUNS.I don't understand (wo bu mingbai). If China is planning on a 20% RMB deval then why would they be dumping their US Treasuries now? My lack of understanding would lead me to believe it would be better to dump after the deval.
On the other hand...when the FED is jacking up the price of bonds, why not sell when you know the FED is overpaying. Buy them back later when the FED is out of powder.....if a journal entry printing press ever needs powder.
I would devalue the Yuan after selling treasuries so I can buy the manipulated down physical gold using the now stronger $USD. That way when the $USD is depegged from oil, I suddently have a currency backed by something tangible. Or something like that.
This is war, son.
Id've said : Wu bu dong - rather than using wu bu ming bai lur... quicker..and you get to use the word 'dong' - no brainer really
"If China is planning on a 20% RMB deval then why would they be dumping their US Treasuries now? "
China has NOT planned any such thing!
They are being forced by the strengthening of the $US to let go of the Yuan peg to it.
China, like many other EM economies, took on waaay too much debt that is for all intents and purposes denominated in a foreign currency: $US.
-& far worse: they missallocated and misused the borrowed funds: empty cities, over capacities, etc.
-Now the Dollar is rising fast making those debts untenable at the low margins that trade with the US has been squeezed down to by the multinationals like Wal Mart and Apple. The marginal utility of debt is collapsing, and carrying costs for the existing debt in $US dollars cannot be paid with revaluation. Like in the US: the Banks and Corporations don't want to default and shutter. The Oligarchs own and run it all: so the Government is trying to bail them out with the Treasuries that have accumulated from the payments of the balance of trade.
China is about to find out that trade with the US was only a good deal if they managed their economy wisely, keeping a lid on debt and NOT allowing missallocation of resources and/or overcapacities and pollution to accure; -which they did NOT.
NOW they will pay with a tremendous bust and will be forced to cede the Treasuries accumulated during the mismanaged trade boom.
..and paper gold continues to languish.
Just sayin'
"And China's sitting on a pile of GOLD... "
Gold which will last them how long when they breach the level of treasuries required to coninue to manage actual trade flows with the US via the likes of Wall Mart and Apple, etc.????
I think that many here are not getting the point...
This isn't a $US Reserve Currency Crisis: this is a Chinese Macroeconomic Crisis that is being handled with such ineptitude by the monetary authorities that it might in turn become a full blown Balance Of Payments Crisis.
Remeber HOW the US got into trouble and was forced to drop the Gold Standard in the first place?
-China has NO Gold Standard to drop.
-China has no Reserve Currency Status or recognized Military Supremacy upon which to stand.
-Once they deplete their stock of Treasuries to the point where they can't clear trade flows their Gold will be gone in a flash and/or the Yuan will be drastically forcibly revalued vis-a-vis other currencies via the Western Banks..
china has the phys gold, so it has the initiative. If forced between losing its shirt and flipping the switch on the bullshit of fractional reserve banking, it has the power to revalue gold in compensation
first , shanghai offers a premium to comex of $100 an oz. All the remaining phys in the west then heads east. This causes the west to stop manipulating the price down to prevent the loss of its remaining gold.
The bidding war on gold begins in earnest, to everyones benefit. When gold is $20 k / oz +, they can get serious about using it to settle national debts.
Do you know any other way out of this mess, aside from WW3 or a three decade depression?
Gold is the fukn key, the only peaceable solution, the only feasible rectitude
The bidding war on gold begins in earnest, to everyones benefit. When gold is $20 k / oz +, they can get serious about using it to settle national debts.
And with miners then getting 10x the reward for digging that they are getting today, everyone becomes a miner.
You gold bugs need to wake up!
And China's sitting on a pile of GOLD...
Valued at $2,000 per ounce, China's reported 53.3 million ounces comes to about $100B ... i.e. about the amount of US treasuries they just dumped ... and half the amount they dumped this year.
Regardless, there is so little gold in the world (1oz per person on Earth), even at $2,000 per ounce, the world's total value of gold is inconsequential in proportion to total world trade.
When will these gold bugs wise up?
… the problem is: There’s the distinct possibility that they don’t know WHAT the hell they’re doing!
http://www.valuewalk.com/2015/08/china-u-s-safe-haven-for-criminals/
I'll have to agree with them on this one.
That may be a very distinct possibility.
WWJBD?
Huma. Ok...more of a who, than a what....maybe
Responding to this:
"ZH, if this is true, this is EPIC. The US $ as a reserve currency days are few to come."
It will take a lot more than this, or China selling all their treasuries to remove the dollar as the RC. A lot more. When 35% of world trade is done outside the dollar, then you are getting more serious. And that means not using the dollar somewhere in the trade and then converting to another currency in exchanges.
But this may be a preamble for China making more serious moves against the dollar. Moves that are coordinated with other key countries. Such as Russia refusing to use the dollar in any way and avoiding the SWIFT system.
For those who do not understand who is buying. The zionist/jmafia who control the Fed and large banks can create trillions just using a computer to create digits, then passing those digits through channels/banks that are immune to audits and presto! Money to buy the world. Before the dollar actually falls they will do this, purchase all the hard assets they can, cover their tracks and then when the collapse occurs they are sitting pretty as they bought everything with totally bogus "money". And no one will be allowed to back track what happened.
There will be a time lag between the massive, secret printing for their private enrichment and when the world markets realize something is seriously wrong. That is the beauty of being the reserve currency (and having a networked corrupt system), it is easy to hide and cover over their tracks so others will not be able to nail down what occured. Just that the is a flood of computer digits that claim they have dollars which slowly and then suddenly have little real value.
Others are better versed than I so, Why does this not occur?
China is doing that which it needs to do in order to survive.
This is NOT about China making any move to claim the GWC status.
China's market is a basketcase, a total wreck. They are not an overall Financial Threat anymore, to the USA, at this point.
They are NO POSITION to claim our status.
WE DID THIS TO THEM. We planned it and executed it.
We demolished Japan's economy in the late 1980s using similar tactics.
We prop up an emerging economy with the liquidity it needs. They grow unchecked. We garner the hard goods giving them CURRENCY. We liquify their Banks. They buy up all the commodities, Real Estate, and Stocks globally.
Then we cut off the sugar teat. We stop providing them with liquidity and cause them to crash. We do this when they get too big and are beginning to become a threat.
Hell the Real Estate in the city of Tokyo, in 1989, was valued at more than the ENTIRE STATE OF CALIFORNIA? Let's write about a Real Estate Bubble...
Yeah...that one? That one was one for the record books I'll tell you.
We EXPORT OUR INFLATION so that we do not feel the affects as bad domestically. They receive our inflation...willingly. It creates a BOOM TIME for them.
SAME GAME. Except that we are in much worse shape than we were in the early 1990s.
This time we may have...er...overdid it. Every foreign nation is a trainwreck.
WHEN they all seek to liquidate their US Paper all at once then we will be IMPORTING OUR INFLATION...right back to our shores. That will be HYPERINFLATIONARY. And that is where the problem lies.
We could get away with this as long as the majority of World Economies are healthy. But, today, sadly, that is NOT THE CASE.
As a result we are fucked.
Exactly, Tom. This is China raising cash and by turning it back into RMB they help themselves. Selling US Treasuries is not an effort to tank them. In a worldwide crash the UST's are going up in price, not down. This is profit taking on a valuable asset because they need the cash.
I do not know that this is really some kind of conspiracy play. They do it to themselves just as the Japanese. In fact, the Chinese economic model is copied from the Japanese mercantilist model. Import raw materials, export higher value manufactured goods. Sell into the world market and create a trade surplus.
It does actulaly help us because they get fiat and we get real stuff.
China has an enormous internal demand for more goods and services. However, linking their currency to the dollar and being one of the most protectionist countries in the world keeps them from being able to make stuff for themselves at a decent profit, at least stuff near Western quality. Ask anyone who lives there about the quality of Chinese stuff made for Chinese citizens. It is garbage and as soon as they have a couple bucks they buy western at very high prices.
In any case, China is feeling pain from it's own clumsy interpretation and exectution of dumb western/Japanese economic models.
It is not a "conspiracy". It is a business model.
I have read that we planned to do this to Burma next.
It does modernize and "westernize" their economies.
Hell Chinese Steel has proven itself superior in the past few years.
But I agree. One of China's follies was that they did not replicate the Japanese Automobile Industry.
Instead of building "Ghost Cities" that are shoddy and dysfunctional at best. maybe they need to have created Auto Works.
The tolerances and Engineering of Japanese Autos far exceeded what Detroit could produce in the 1970s. The Chinese, with better planning, might have been able to beat the Japanese at their own game rather than sell us trinkets.
But there was too much malinvestment and too much greed for instant gratification rather than long term planning.
Of course we enabled this addiction. Of course we did benefit from it.
But when I read about new emergent markets that are targeted for this same type of exploit then I am inclined to believe that it is planned rather than some random event. China's development ws no accident after all.
There is a learning curve in manufacturing. You start out with crappy, low quality stuff and you go from there. You need to have a well trained set of skill workers which takes time no matter what. That cannot be rushed.
I have seen lovely new concrete streets in China with potholes. Their goal is to pave another 15 miles and they do not come back to fix anything. That is the way they work. The locals show up and throw dirt and gravel into the hole and shrug their shoulders.
Things can go well with China. I am not arguing that. However, it takes time and their pricing should reflect the costs for internal demand, not external. They could do pretty well focusing on that and stop the stupid ghost cities.
"WE DID THIS TO THEM. We planned it and executed it. "
Indeed. See my post above written before I scrolled down to read Tall Tom's.
Gold Bugs should pay very close attention to China.
There will be no Gold Renmimbi.
The only thing missing from your synopsis are quite a few buildings imploding and falling at freefall speed.
Throxx, Tom, Freedomguy
one perspective missing from your 'china is insignificant' assessment
china is the creditor to America in the same way america was to europe circe 1920's/30's. And the perception of china's comparative economy is all based on financial propaganda. Think:
It is but for the currency issue that china is perceived as weak. If someone waved a magical wand and overnight every country's fx traded at parity with everyone. what comparison would you make between the US and china? China is an enormous powerhouse of the REAL ECONOMY - not the funny money. And if they decide the global banking system can implode on itself, well, the global banking system in its greed has made itself vulnerable enough for that to transpire. TBTF my ass.
China already ran up too much debt.
They fell into the middle income trap and will not reach 'escape velocity'.
They mismanaged the window of opportunity with indiscipline and selfish petty greeds.
China has already been looted.
WHY do you think the Chinese authorites are seeking the many people who have flaed to the US and Britain with billions?
-It is stolen money that should never have left China.
-& the US and Britain aren't giving them up because the US and Britain can grab them any time and seize the assets/money themselves via the same civil forfeiture laws we have been decrying of late.
WHY send these fleeing thieves back to China when you can asset strip them here and make it even harder on China to deal with their indiscipline, short-sightedness, selfish petty greeds, and criminality?
It looks like our banker is firing us.
I be wondering what the Chinese got for those alleged 100 Billion USD pieces of paper. The headine is they "dumped a 100 Billion". So how deep did they have to discount `em, assuming the 100 billion is face. Ya can'y just up an redeem those guys, it takes an ask and a bid to a UST dump.
Confused, were the turds, dumped by China, bonds or bullets, like notes and bills?
It must `a been a deep steep discount. After all, it is USD denominated debt. An as we all know - everybody is hot for that shit..
Guessing better to eat the haircut now than it be writing letter's, over and over and over .. infinity, to the DOT's pursor asking for the principal when they mature - meaning no way those guys gonna be covered at maturity.
Also Guessing the ole 'full faith and credit' shtick has about run de course.
Somebody has to buy them so China is draining exterior liquidity
Double trouble as stocks seek any bid
So is it possible that the PPT in the U.S. Pulled their support and allowed the market to fall to create a demand for all the recently dumped Treasurys?
My first thought when I read the headline.
My sentiments....also their National Supercomputer HQ is only a couple klicks away.....CIA is a MOFO
Cue another Tianjin 'Rod from God' strike, a little closer to Beijing as those crazy Chicoms didn't get the message the first time, in 3... 2... 1....
The FED was the buyer, I recon.
Via their BLICS proxy (reference Jim Willie) which replaced their Belgium Bulge. Why did China devalue their Yuan recently? So they could sell their Treasuries for a higher return? Then was this why they were attacked with the Rod of God in retaliation?
http://www.treasury.gov/ticdata/Publish/mfh.txt
Rod of god? I believe Trump was throwing up illuminati signs while he said 2 3 a few times during the humvee portion of the speech tonight before I believe the rod was used. Though Trump actually did do this, so who knows what's going on. Just BTFD forever.
I also do not think China cares what their Yuan is valued at right now, until they present their stash of gold.
Rod of God? Sure. If some space based weapon was used then China would have knocked it right out of orbit the next day. They are extremely capable of doing this and have already demonstrated it on more than one occasion.
Why is rod of god talk being downvoted? Can we see who votes either direction?
Because of the old axion of 'Never attribute to malice that which can be explained by incompetence.'
Ever been to China? There is no word in the English language that can describe the 'shoddyness' of the workmanship you see when you move past the 'touristy' areas. It is simultaneously breathtaking and mind blowing. It is not hard to imagine, therefore, that the port explosion was the result of an epic fuck-up.
Also, China has demonstrated her ability to take down space based weapons with land based missile systems. Any rod of god launcher capable of hitting that port would equally have been able to be blown into space confetti.
Yes but you will only find out AFTER they have done it. AND they are in their offshore havens.
LOL....the FED is HOTEL C'ed. They can NEVER sell their T inventory.
The question really is: Who is buying these treasuries from them in FX markets? I'll put ALL my money on the Fed (who used QE3 to buy close to 80% of all US treasuries). Looks like QE4 will need to come out a bit sooner than expected to buy up all of this dumping. Goes along with Russia completely dumping the dollar earlier this year as well.
So China is selling USTs and getting dollars in return? Because the Treaury only has dollar denominated bonds and dollars.
Or are they selling USTs in the open market and getting Yuan in return? That will lower the liquidity of the Yuan. I thought they wanted to be more liquid to stimulate exports.
I'm going with "they have no idea what they are doing" --> conflicting factions in China.
Ill worry even more when or if China and Russia starts selling phyxx gold.
Only doing the "challenge" thing here, but wasnt the Chinese dumping of treasuries one of those things that had us so worried before? That was supposed to be one of the "strangleholds" over US because it could increase our interest rates "over night". Well, they are apparently dumping them and interest rates are going... down. Just sayin. Have to re-think things for a while.
Its all about the magical printing press, which works so well until it doesn't.
the idea of how fast china has been selling treasuries is a good one to write about, but i have not seen any reliable data. ZH is getting this "information" from SocGen's speculative note? that isn't data, it's a guess by a mid-level analyst at a mid-rated Ibank.
china has been planning to sell off treasuries since they purchased them, and 106bb per 2 weeks is certainly a faster pace than they planned. however, there is no data backing that number. do you really trust the guess of someone who has no more insight/connection to the pboc or chinese politicians than any of us?
Good to see there are still a few people on this website that don't follow the group thinking. I applaud you, sir.
Reliable data??? These days, if TPTB are pulling strings, you ain't gonna know until it's over.
Just like State Street dumping over 14 million shares of APPLE (#1 holding) before June 30, but THAT info was not public until 8/13. Check how AAPL stock responded during that period. Also check the millions of shares some others dumped before that date too. Smart money, or just dumb avalanche starters. If its not a top, we'll make it a top. Damn banksters.
Wait a sec.
If China sells Treasuries, then they get dollars. If they sell dollars in the 4X market and buy .... er.... Yuan? Strengthen the Yuan?!!?!!?!!?!!?
What am I missing?
If China were selling Yuan and buying dollars to devalue the Yuan, then they'd need a parking spot for the dollars bought against the Yuan sales, not vice versa. And that means buying treasuries or other USD denominated stuff.
What am I missing here?
Why do they want to raise dollars to sell? To buy what on the other side? No, they don't want to sell dollars they want to buy them against Yuan to devalue the Yuan, if dollars are what's being used in the Yuan devaluation intervention..
Unless they're buying something other than Yuan, like uh .... lemme guess..... maybe something Mrs K likes?
Somethings wrong with this picture, folks
the US treasuries they own are *already* denominated in dollars, so they don't need to 'sell dollars' to effect the trade. think of it more as they are converting their US$ denominated treasury notes into US$ denominated currency, which they are then using to buy CNY to defend the fix.
and they arent doing this to devalue the CNY.. theyre doing it to support the new, lower, CNY fix which the market doesnt believe is the last stop.
OK, so if they're defending the fix, means that they're strengthening the Yuan v USD.
That's my point.
The whole "problem" is a weakening Yuan, not a strong "Yuan"
A strong Yuan is a retreat from the global currency devaluation war, a shrinking of the Yuan money supply. I think not what's being done or desired, no?
Perhaps, Knukles, they are buying gold and/or futures at bargain $USD prices?
The game's afoot!
China did say, earlier in the year, that it was going to announce something in September. September's getting close!
Lots of gold. Disbursing Treasuries. Hmm.
DavidC
i suspect thats when the shanghai gold exchange departs in price fixing from the western system, adds a small premium, thus sucking the last of the wests gold (unless the West give up the manipulation and let china lead in the price setting)
I vote for this theory.
Gold is not salvation. Gold alone will not save them or you. Monetary policy only goes so far, and is only temporary. Morality and virtue is where true wealth comes from. There are still loving people in USA, not all is corrupt as they want to lead you to believe. There are many benevolent and righteousness people still left in the country, and if there is one thing I know, the righteous will not be forsaken. The wicked will destroy themselves. The wicked are fools. Repent and learn to love your neighbor as yourself. If we all did this we wouldn't need money at all.
Gold would only be a good play to strengthen their own currency which they actually do not want at this point. If their economic expansion had continued and they wanted to make a huge play at replacing or at least challenging the dollar then large gold reserves would be a smart play. Right now it would be a useless play as best I can tell. They need cash, not gold and using the dollars for gold is not bad but will not achieve their interventionist goals.
agreed, that the problem IS a weaker yuan (putting aside all the details/inter-relationships that i suspect we're largely in agreement on anyway).. but the problem of weaker yuan is itself a reflection of the truer weakness of the chinese economy.. china's moves are not to strengthen the yuan, but to soften the downtrend in what would otherwise be a crash to devalue it.. so their question is: do they want it to devalue overnight down 20% as dictated by the market? or do they want to gradually reset lower piecemeal, maintaining some semblance of the illusion that theyre in control. it seems that for now, theyre opting for the latter, but at a high cost... needing to defend each new lower fixing, becuase its STILL not NEARLY low enough.
at this stage, it seems near a fair accompli that the yuan will continue lower.. the only question is: does china use up it's foreriegn reserves (UST) to defend it in such a way as to soften the fall, or do they step-back and pull a single BIG reval (down 10 or 20%). i suspec that's whats being debated right now (among other things) in beijing or wherever.. is it worth it to spend all these reserves only to soften and postpone the inevitable? which will then leave them with a STILL lower CNY (down 20% or whatever) but ALSO depleted reserves? or do they take the 'initiaitve' and sooner-than-later announce an 'official' reval, lose some face a la BOE/soros days, but still sit on all those reserves.
smells like just such an opportunity for the global-macro guys (like soros with the BOE) to pile on in whatever ways they can to force china to reval bigger and sooner rather than later.
They do need to worry about pissing off their upper and middle class too.
They do need to worry about pissing off their upper and middle class too.
.
does china use up it's foreriegn reserves (UST) to defend it in such a way as to soften the fall, or do they step-back and pull a single BIG reval (down 10 or 20%)
Chinese will stair step it down.
So, RMB devalue, sell dollar reserves, stabalize, repeat, dollar assets depleted.
Interesting theory. However, they could probably do the same thing and actuallyl accomplish several things by letting the currency float. However, that gives up control and nobody does that...not even the Chubby dictator, Kim who rules the welfare ghetto of the world. Control is always the top priority.
Any idea how this would be different had they been accepted to the SDR? Seems like alot of stuff has been happening since the rejection. A green light to devalue? A retaliation?
China didn't have a chance in hell of being accepted to the SDR, so that's a moot question. The four horseman of the SDR (Dollar, Pound, Euro, and Yen) are useful currencies because they exist in large quantities outside their home countries. Their inclusion in SDR is based in part on that usefulness abroad, in part on more-or-less liberal market conditions, and in part on whether the country has friends or not among those who run the IMF. China's short in every suit at the moment.
China needs to export a lot of its own currency to other nations, stop the blatant and hamfisted manipulation of all its markets, and stop pissing off its neighbors with territorial claims (and maybe start cooperating with the rest of the world on North Korea). Then it might get into the SDR club and enjoy the exactly zero benefits that it confers. Until then, it's just a pipe dream of someone in the Chinese govenrment who is obsessed with the SDR status as a fetish of prestige: because that's all the SDR status is, a status symbol.
Well written but that is not who China is. In their 18th century way, they still want to be empire and do not really understand the economics of how to do that. They don't understand economics very well and they still have the autocratic mind.
I believe you are on to something @spanish_Inquisition -
DXY did dip in the last 10 days... Bit of pounding the chest coupled with a middle finger aye?
Maybe the world might get pissed off more at there devaluation yah think? Switch Catch 22 unsure what to call it.
i hear you though with regard to the chinese potentially using this all as an opportunity to add to 'the shiny' stash.. but if they just devalue, which would crash markets (and maybe gold in USD terms? or at least give the monkey-hammer gold-bashing algos more ammunition to crush the papergold markets) then why wouldnt they do that FIRST, and only THEN sell their UST and use the proceeds to buy cheaper gold?
Why wouldnt they do that FIRST? To give the world the finger for not letting them into the club. Very proud those Chinese.
Previous question redacted.
This suggests to me China was tricked into devaluation.
Either that or universal governmental incompetence.
A stock market crash is typically accompanied by withdrawals by foreign investors selling stock. So the Chinese are propping up their Yuan by selling USD.
China and th US are both controlled by the Tribe. So this is a well coordinated operation.
How can we be sure the Tribe doesn't control you?
In theory they control everything.
Knuks, the Chinese are selling into a rising market of 10-year-plus Treasuries prices. I can nearly assure you the Chinese aren't swapping for other dollar-denominated assets. Who knows, they may be buying the euro, yen and gold with some of the proceeds to indirectly affect the dollar's relationship to gold and the yuan's valuation against the euro and yen, in addition to more gold purchases (maybe even directly from other sovereigns). That's what I would do. The last piece of ammunition for the Chinese is to affect a new standard within central banking: a proper revaluation of its new primary reserve, gold, from which the PBOC can now show a very good reason why the yuan should muscle into the fab-4 of the bogus SDR. But the SDR is a red-herring issue as far as the Chinese are concerned, in my opinion; they're making other arrangements to affect a better outcome for China when these goons at the central banks throw in the towel. The petrodollar system is dead; it just hasn't been announced yet. How else can the Chinese sell so much Treasuries when demand for this crap is waning? They need to wait for the globe to run to liquidity in order to sell U.S. garbage. It's brilliant. I disagree with a poster, here, who wrote that it's possible that the PBOC doesn't know what it is doing. The PBOC knows exactly what they are doing within a context of chaos.
Diversification if you ask me... Load up on more commodities on the cheap, all of them. Got to have material to fight the whole world maybe? Unused tankers, etc...
and they arent doing this to devalue the CNY.. theyre doing it to support the new, lower, CNY fix which the market doesnt believe is the last stop.
Right. They started a stampede! Those exiting investors are probably buying Treasuries.not buying yuan, hanging on to dollars and are going to buy US stocks and oil on the cheap, complete guess on my part
maybe they are just getting ready for the next step in the evolution of money. If the world is heading for free floating currencies they won't need treasuries. Maybe they are just using the treasuries to buy cool stuff...probably not but...in a free floating currency system it will be the value of exports less imports that causes the currency to find it's relative value.
maybe gold...? doubt that too because they have already shown they won't disrupt the gold market or they would have already made their play and the POG would be much higher...
OK you got me...I guess we'll have to wait to see.
Dateline London, FT, August 25, 2015
This Chinese chap goes into a bank to change some currency. After receiving his money he asks, "How come I came in here with same amount of money as yesterday but today I get less Yuans in return?"
The banker says, "Fluctuations."
The Chinese guy replies, "Fluck you Blitish too."
Made me smile Knuks!
DavidC
Are you trying to get me fired?
Ah the old fuck you asians bit.
Remember, it isn't gay if you don't push back.
They can always use those dollars to buy gold and silver instead of Yuan. After all, PM's are reportedly cheap in dollars and China is in the mood these days to stack PM's. They could also use dollars to buy all those naked shorts somebody is dumping in paper PM's - then one day, when they've amassed a huge position in PM's, they can collect (or try to collect) the physical. Lots of good options available other than Yuan for the Chinese to park their dollars, wouldn't you agree?
They probably use the dollars immediately to buy gold or other nonperishable commodities.
China fast-liquidating $1T of T-bills into a seller's market (because Fed is buying all?) then buying gold (other countries' remaining reserves held in the US being sold by the Fed?) at its suppressed price seems like an amazingly sensible move.
" Now would be a good time to empty one's bank account if that hasn't happened already..."
The world is full of fools....therefore there are still people that keep money in banks.
Secede or Die
Secede....to withdraw...that means the banking system also.
Mr. Galt forgot the rest. Get the (soon to be worthless) FEDSRIP OUT of the BANKS (before they declare a 'Banking Holiday' and confiscate it, because IT'S NOT YOUR MONEY to begin with)... and convert it into something physical and tradeable and tangible while it still holds some type of 'value'.
Food and water, gold and silver, guns and ammo.
It'll take a week or so for the reality to sink in to the worldwide markets. Barring any OTHER unseen events, the dominoes will start fo fall as far as UST, and once that happens, watch the markets react.
A good supply of Orville Redenbacker's could be one of the things purchased with the fiat crap currency T.P. NOW, just in case.
I asked our resident Investor [Sprott Investment] if I should take my money out of the bank on Friday. He told me not to panic.
Chinese Stock Market is down 43% from June 12th.
43 fucking percent. Now that's a crash!
is it even down for the year??????
Time for another
DETONATION
as I said in my previous post.
So, devalue, sell dollar reserves stabalize, repeat, dollar assets depleted.
Wow, China has embarked on a course without any signs of wavering, even with a massive explosion in a main port area, what's next... a dam on the Yellow river maybe?
I would not be surprised at all.
“The trade volume of the market can reach 2 trillion yuan ($300 billion) a day, which means if it collapsed no one could save it,” Li Jiange, vice chairman of state-owned investment company Central Huijin, wrote in a widely circulated blog post. “The issues of the market should be handled by the market itself.”
the trouble isn't with China dumping treasuries; it is on the other end of the deal. the fed must sop up every unwanted treasury they throw their way, whether through belguim or some other front. at a time when the fed is gearing up for QE they will, at the same time be adding throwaways to their balance sheet.
this is how hyperinflation begins. we already have enough paper floating around the world to cause it. it's just a matter of it all being returned to sender.
"Run Charley"!!! Part hacks and Ass clowns should not be running economies....ANYWHERE
So the U.S. PPT lets the market fall so that people will be scared into buying Treasuries. Smart move
Bet the PPT freaked a bit when they saw the speed and magnitude of the drop with the market au naturel.
AKA Yellen goes commando.
This is also the PPT "oh shit" moment. They are runing out of suckers, er, buyers.
did they believe IR were going up? wouldn't you?
No problem, The Federal Reserve will buy all Treasury sellers.
Ms. Janet, welcome to hyperinflation.
It is not hyperinflation if it all goes to the 0.1%
Rope
if you were a major producer would you accept a grossly over printed currency as payment? Just because it is held by wealthy people now doesn't prevent it from going to shit in the near future. It is the confidence that it will retain some kind of value that makes the dollar. When that goes...buh bye dollar....
Americans welcome to Agenda 21 (where your land is their land).
That's Mr Yellen to you, bub.
The stuff of dreams and nightmares. :D
Dump it all.