Central Banks Panic As Global Liquidity Premia Spike To 4 Year High

As is usually the case, there is a sudden and desperate scramble for liquidity to window-dress balance sheets and it has sent China 7-day repo-rates (the premium for locking in liquidity across the calendar new year) to 6.00% - the highest since year-end 2013.



Perhaps in response to this apparent crisis, The PBOC has also announced that banks will be allowed to use reserves at the central bank of up to two percentage points to meet liquidity needs during the February lunar new year celebrations.

China's central bank is allowing temporary reserves use for 30 days to cover any liquidity needs.

Notably, at the same time, overnight Hong Kong Dollar HIBOR rates exploded higher...


Suggesting there is more than a little tightness in Chinese money markets ahead of the calendar new year.

This was also very evident in JPY, EUR, and GBP  liquidity markets... until today...


That is no longer the case in Japan, Europe, or UK as miraculously basis swaps exploded higher (less penalizing) today as The ECB tapped the Fed’s FX swap line for $11.9b for 21 days at 1.89%, the most since December 2012, and BOJ tapped the line for $101m for eight days at 1.91%, most since Oct. 4.

*  *  *

If everything is so freaking awesome out there in the global economy - why are these extreme measures being taken by The Fed, The PBOC, The ECB, and The Bank of Japan?


conraddobler Thu, 12/28/2017 - 23:42 Permalink

The idea that crowd mentioned in the article are "caught off guard" by the consequences of their own actions is intriguing.

They have fooled themselves????

Seems quite impossible to do.

LaugherNYC Fri, 12/29/2017 - 00:09 Permalink

Year end stuff. Not exactly freak out territory. That’s when there is NO PRICE. We have been there. This is not that.

Of course, in 12 weeks markets may be infused with Strontium 90 according to other ZH prognostications, soooooo....


where do yo keep your powdered milk and flashlight batteries.

Oh, and guns...lots of guns.

truthalwayswinsout Fri, 12/29/2017 - 07:00 Permalink

This is all chartist nonsense. They have even invented their own secret words to use to give it a special flavor for any idiot to buy into it. This and bitcoin have a lot in common. They are both not real.

OCnStiggs Fri, 12/29/2017 - 07:24 Permalink

Before your investments and the USD are completely worthless due to action by the Fed...


I know the "transition" to the new board has been painful but, how about a one-time donation to Tyler to help with the cost of that? See the donation tab above. (I didn't even notice there was a donation option...)

If you enjoy the news, information, zaniness, and incontrovertible Liberal stupidity professed daily on these boards, help out with a few buckeroonies -or Bitcoins. (C'mon... You are rich now. Share your fortune!)

Just sayin'

Ban KKiller Fri, 12/29/2017 - 08:32 Permalink

Quick! Change accounting methodology! Print, it's your turn! Central Bank of Oman?! Just kidding, don't buy Omani stoogits at any discount. 

Just dynamical financial goof...