Posts Tagged ‘Shibor’

Notes From Underground: Is The East Wind Prevailing Over the West, Chairman Mao?

June 23, 2013

In following up on my thoughts on the move in SHIBOR, I always want my readers to follow along with my thoughts when it comes to China. In my opinion, China takes on added significance because of its huge impact on the GLOBAL MACRO scene. In June 1998, President Clinton was heading to China for a very important meeting with HU JINTAO. Prior to Clinton’s June 25 trip, the U.S. Treasury intervened in the foreign currency markets on June 17 and halted the rise of DOLLAR/YEN by selling DOLLARS and buying YEN. The Asian contagion debt crisis had seen the YEN weaken by 35% during the previous crisis and the Chinese leadership was concerned about the impact of the weakened YEN on Asian exporters.


Notes From Underground: SHIBOR, My View On Its Significance

June 20, 2013

Many want to believe the FED is the responsible party for causing the massive unwinding in all variety of markets. The deleveraging of all assets classes in a zero interest rate environment can and will cause massive pain for those who utilized ultra cheap money  to attain assets that looked so good riding the momentum wave, but the undertow from deleveraging can drowned many swimmers. But is the source of deleveraging Chairman Bernanke? Maybe. But the more important impact may be from the Chinese. The SHIBOR, or overnight lending rate similar to LIBOR in the western capitalist countries, has skyrocketed during the past week, rising to double-digit levels–almost 25% at some point. The impact on the Chinese markets has been devastating but more importantly it has caused fears of a major crisis in the Chinese financial system and a negative impact on the entire fragile global financial system.