Friday December 24th, we got word as I posted HERE that the Chinese just saw a failed bond auction with the opinion at the end, 4 simple letters "UGLY".
This is one of the reasons traders don't hold positions over extended holidays being there isn't much any trader in the US can do about surprises with the markets closed and the latest Chinese announcement is a little surprising in its timing.
It seems the Chinese are tightening monetary policy once again as I've been talking about here for quite awhile, just search the site for "Chinese Rate Hike" or any combination of those. It had been well over 3 years since the People's Bank of China raised rates, now we have two raises in 3 months with the latest being a 25 basis point rise in deposits and a 25 basis point rise in lending. This is the Chinese acting quickly and apparently a little fearfully with the failed auction just a couple of days ago, try to quickly cool the economy as bond investors seems to be fearful of the "hard landing scenario".
In any case, regardless of the failed bond auction, the announcement's timing strikes me as a little strange, it's a major policy decision taken with the world's major markets closed.
5 years ago
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