money market

Mayhem In Money Markets: China Warns Investors Not To “Underestimate” The Danger

The complexity of the situation shouldn’t be underestimated. That's a quote from the PBoC emphasizing just how difficult the Chinese central bank's job has become. "China will give higher priority to balance between tightening and easing and keeping the monetary policy neutral," officials said, in a statement following the quarterly meeting of the monetary policy committee. It would be difficult to overstate how precarious the balancing act has become since the August, 2015 move to begin a controlled devaluation of the RMB. Indeed, I can scarcely count the number of short posts, articles, and lengthy missives I've penned this year about Beijing's impossible juggling act. This month, we got the most recent manifestation of China's never-ending game of "Whack-a-mole" when efforts to curb speculation and tighten liquidity in money markets ended up conspiring with a surprisingly hawkish Fed to trigger a bond market meltdown. The situation was exacerbated by at least two high profile scandals involving supposedly fraudulent seals and paperwork tied to entrusted bond deals. Over the past several weeks, Chinese money markets have experienced a good deal of turmoil. On Thursday for
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