Posts Tagged ‘SAFE’

Notes From Underground: SAFE secrets no longer in the vault

July 7, 2010

The State Administration of Foreign Exchange (SAFE), which administers the vast CHINESE foreign reserves, said it would not go the “nuclear option” and dump U.S. treasuries in a one-off move to reallocate its holdings, but SAFE called upon Washington and other governments to pursue “responsible” policies. The SAFE official told the world that during the last four months they’ve been accumulating Japanese government bonds at a record rate, which has recently pushed the YEN to new highs. Also, the Chinese officials said they would not be purchasing GOLD as the market was too thin and volatile. Plus, whatever the Chinese purchased would not be enough to truly diversify their portfolio.

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Notes From Underground: G20 Dead as Geithner comes up short in effort to criticize the German austerity measures and the ban on shorting and naked CDSs

May 27, 2010

Oh well, another day  of market volatility emanating from the four corners of the globe. The Korean Peninsula sits on edge, the Chinese say that they are still investing in Europe, the U.S. Congress is still in the throes of financial regulation, and Treasury Secretary Geithner stops in Europe to add to confusion to a muddled mess. The Chinese denial of the SAFE rumor led to a sharp equity rally and in general a market profile of risk on: the dollar sells off as money searches for return rather than safety. The financial world is truly the soap opera “As the World Turns.” Volatility is here to stay and the most important task is to find the dynamic that is in play at any one time. Is it LIBOR, commodities, easy money? Which ultimately drives the risk-on/risk-off drama?

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Notes From Underground: Just when the market thought it was safe to rally … SAFE is rumored to signal OUT

May 26, 2010

We thought we were finally getting a little relief rally in the equities, with a thaw in the Libor/OIS and the EURO FX market attempting to hold onto its late gains of yesterday, when rumors about the Chinese State Administration of Foreign Exchange (SAFE) wanting to dump euro-denominated assets. There was no name to the spokesperson who made the statement. We are very skeptical of this rumor because if the Chinese were serious about wanting to dump euro debt, we doubt they would announce their intentions. As we mentioned yesterday, it was the Chinese deciding not to buy Greek debt that set the current debt crisis into motion. Adding to the euro’s problem was the 5 year BOBL auction in Germany that did not get the fulfillment of BIDS, thus a “failed” auction.

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