- Meanwhile In China, Giant Liquidity Shortage Pushes Overnight Rates To 5 Year High
by Tyler Durden, https://www.zerohedge.com/
One day after we reported that China’s overnight money market rate jumped to the highest in 15 months amid i) continued drainage of liquidity by the PBOC and ii) a warning by a PBOC advisor that asset bubbles have formed in the stock and property markets, China’s overnight repo spiked even higher, surging to its highest since March 2015, as investor jitters over liquidity mounted due to the central bank’s accelerating withdrawals.
The overnight repurchase rate rose 23 bps to 3% on Wednesday and a further 4bps to 3.04% on Thursday, taking the increase this week to 59 basis points. Such increases in January – just ahead of the liquidity-heavy Lunar New Year – are anomalous. As Bloomberg notes, “China’s money-market rates are rising fast in January, defying a seasonal pattern of decreases, amid concerns over monetary tightening.