They don't think they have a reason to sell, but in China they do have a very good reason, and they're selling in whatever markets Chinese companies appear. You have something like a crash or a giant whacking in the popular dually listed Chinese stocks occurring as the short rate, say, SHIBOR, soars. It was marked earlier today at 6.2%.
China sets the world financial agenda if only at the margin in the prime determinant, the cost of money. The US has a different total configuration on that front in comparison to China, but not so at the margin. The evidence for this correlation first appeared many months ago in the form of an expected need to increase Permanent. The expectation of increase in US Permanent gives Chinese speculators confidence, and this results in Chinese domestic borrowing to speculate in Chinese assets like RE and stocks.
Thus, FED must sell Permanent, but they won't since other exogenous forces has them now, finally, leaning to buy. The beast is swallowing itself by the tail. |
