Chinese bank market freeze

Thursday, 20 June 2013

There’s no mystery about why stocks and the dollar are getting pounded today but there is another bogey that is not helping. As I noted this morning, China is going through something of a credit crunch with the PBOC apparently engineering high short term debt costs to squeeze down credit growth. However, today it’s looking a little more chaotic with all short term rates shooting for the stars. 7 day repo for instance:

According to Patrick Chovanec:

The PBOC still has options. Looks like it should use them.

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.