{"id":47332,"date":"2019-07-19T13:53:35","date_gmt":"2019-07-19T18:53:35","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47332"},"modified":"2019-07-19T13:53:39","modified_gmt":"2019-07-19T18:53:39","slug":"something-just-broke-in-china-as-repo-rate-soars-to-1000-overnight","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47332","title":{"rendered":"Something Just Broke In China As Repo Rate Soars To 1,000% Overnight"},"content":{"rendered":"\n

Something Just Broke In China As Repo Rate Soars To 1,000% Overnight<\/a><\/h3>\n\n\n\n

Ever since the unexpected failure of China’s Baoshang Bank in late May<\/a>, which caused a freeze <\/a>in the interbank market among smaller, less credible (and government bankstopped) banks, and which sent rates on Negotiable Certificates of Deposit (NCDs), various bank bonds and assorted report rates sharply higher…<\/p>\n\n\n\n

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… investors have fretted that China appears on the verge of a “Lehman moment”, where wholesale interbank liquidity and overnight funding markets suddenly lock up. The reason for this, as we explained last month<\/a>, is that China\u2019s short-term lending market for banks and other financial institutions has for years operated under the assumption that Beijing wouldn\u2019t allow big losses in the event of defaults or insolvencies <\/strong>(hence the reason why Baoshang’s failure was a shock)<\/a>. That confidence has been shaken by regulators\u2019 unusual public takeover of the troubled Chinese bank near Mongolia last month, and the even more stunning public admission by the central bank that “not all of Baoshang Bank\u2019s liabilities would necessarily be guaranteed.”<\/p>\n\n\n\n

\u201cBank failure always causes greater concern given systemic fears,” said Owen Gallimore, head of credit strategy at Australia & New Zealand Banking Group, suggesting greater pressure on the private sector ahead.<\/p>\n\n\n\n

Naturally, with China growing at the slowest pace in recent history, beset by shadow bank deleveraging, trade war, a shaky transition to a consumer economy and China’s first ever\u00a0current account deficit<\/a>, these stresses come at a very bad time for the normal functioning of the local economy.<\/p>\n\n\n\n

Furthermore, nonbank borrowing through bond repos and interbank loans skyrocketed since China\u2019s central bank began easing monetary policy in early 2018, hitting a net 74 trillion yuan ($10.7 trillion) in the first quarter of 2019, according to Enodo Economics, and up nearly 50% from a year earlier. <\/p>\n\n\n\n

 \u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Something Just Broke In China As Repo Rate Soars To 1,000% Overnight Ever since the unexpected failure of China’s Baoshang Bank in late May, which caused a freeze in the interbank market among smaller, less credible (and government bankstopped) banks, and which sent rates on Negotiable Certificates of Deposit (NCDs), various bank bonds and assorted report rates sharply […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[26317,25981,130,26315,2615,4318],"class_list":["post-47332","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-bonds","tag-baoshang-bank","tag-china","tag-ncds","tag-peoples-bank-of-china","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47332"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47332\/revisions"}],"predecessor-version":[{"id":47333,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47332\/revisions\/47333"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}