WARNING: This Important Country Could Be Approaching A “Lehman” Moment, Counterparty Mistrust Is Beginning To Reach Extreme Levels

China Interbank Market Freezes As Overnight Repo Explodes To 25%
“Counterparty mistrust is beginning to reach extreme levels…”
It seems liquidity (or counterparty mistrust) is beginning to reach extreme levels in China as the nation’s banking system is now quoting overnight repo transactions at 25%. The explosion in funding costs echoes the collapse in trust (and surge in TED spread) among US banks in the run-up to the Lehman bankruptcy. MSCI Asia-Pac stocks are down over 3% with China’s Shanghai Composite -2.5% at seven-month lows.
- China’s 1-day Repo Rate Climbs to Highest Since at Least 2006
- MNI – CHINA OVERNIGHT REPO FIXING AT RECORD HIGH
China’s bond market is also collapsing:
Yield on 3.1% govt bonds due January 2016 jumps 39 bps to 3.749%, biggest rise since notes were issued in January
China this week…
US in the run-up to Lehman…
Charts: Bloomberg
http://www.zerohedge.com/news/2013-06-19/china-interbank-market-freezes-overnight-repo-explodes-25
The Chinese Interest Rate Chart That Has The Entire World On Edge
Read more at http://investmentwatchblog.com
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