johngaltfla.com / by John Galt / January 8, 2017 17:10 ET
Bloomberg sent the first warning signal on December 27, 2016 with this article:
And this excerpt was a major hint as to why:
“You have Chinese New Year quite early, and because of that one-month window, most of the banks will try to lock the money in a three-month cycle,” said Arthur Lau, Hong Kong-based head of Asia ex-Japan fixed income at PineBridge Investments. “The current situation in the bond market is partly because of year-end and because of Chinese New Year.”
The week-long Lunar New Year holidays are traditionally a time when people give out cash gifts and companies pay employee bonuses.
China’s 10-year government bond yield has surged 21 basis points in December, poised for its biggest monthly increase since August 2013, and its first annual gain since that same year, Chinabond data show. The yuan’s 6.6 percent decline in 2016 puts it on course for its worst year since 1994, while the Shanghai Composite Index is headed for its largest drop in five years.
While that sounds like a perfectly logical explanation, the problems extend far beyond year end juggling and cash management. The Epoch Times highlighted this crisis in a story on New Years Day:
The post The Chinese Banking Problem is Sending Major Warning Signs appeared first on Silver For The People.