China Suffers Failed Treasury Bill Auction


Tyler Durden's picture

One day after China’s regulator halted trading in bond futures for the first time ever, Beijing suffered another catalytic bond-market event overnight when it failed to sell all the Treasury Bills on auction Friday, for the first time in almost 18 months, as bids fell short of minimum requirements, according to traders required to bid at the auction.

As BBG reported overnight, the Ministry of Finance sold only 9.57 billion yuan ($1.38 billion) of 182-day bills in a planned 10 billion yuan sale, and 10.85 billion yuan of 91-day notes in a planned 12 billion yuan sale, according to a statement from the bond clearing house. What is notable, is that the Bills on offer paid a hefty yield: the 182-day bills sold for 2.9565%, while the 91-day bills sold for 2.8991%.

In other words mainland bond traders are concerned that short-term China rates could spike substantially in the next 3-6 months.

The failed auction comes despite the December 2014 adoption of a “primary dealer” system which includes 50 banks and which are required to bid at debt sales. On Friday, more than one of China’s dealers did not do as mandated, leading to the unexpected outcome.

 In an amusing comment shared yesterday by the WSJ, Hao Hong, co-head of research at Bocom International said that “People woke up to the fact that the bond bubble is too large. The bond market in China is under severe pressure, across the board.”  Today’s event confirmed his observation.

The auction failure has come amid a debt selloff that has surprised investors, and which many dubbed as indicative of the bursting of the Chinese bond bubble after China’s 10-year sovereign yield plunged the most on record Thursday, leading to a brief freeze in futures trading in the $9 trillion bond market. The notes are pressured from a combination of factors, with hawkish Federal Reserve comments adding to the heat from the yuan’s decline and waning money-market liquidity. The People’s Bank of China has steered borrowing costs rates higher, forcing a correction in the highly leveraged market.

“No one has the time or demand to bid for short-end government bonds,” said Guotai Junan Securities Co. bond analyst Xu Hanfei. “Short-term funding is tight, money-market fund redemptions are ongoing, certificate of issuance rates are rising and short-term liquidity hasn’t eased markedly. In addition, sentiment in the bond market is poor. Even demand for short-end bonds is weak.”

Hopefully demand for longer-dated bonds will be stronger, although that may be bold assumption: “the Chinese bond bull market is over, as we have seen a turning point in money market rates this year,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management, referring to a tightening of liquidity in China that began this autumn and has recently gathered pace. If that view becomes prevalent, failed auctions will be the least of Beijing’s worries.

Earnest Struggles to Answer How ‘Effective’ Obama’s Response to Russian Hacking Was


No one has ever shown any “evidence” that Russia or Putin “hacked” into and changed the election results making Trump the winner over Hillary. There were leaks from insiders apparently at the DNC and from someone with access to Podesa that provided internal emails to Julian Assuage at Wikileaks. which presented the DNC and the Clinton team in a negative like. The national traditional media played this material down so the general public never really new much about this, however it to help support Trump with his already large band of deplorables. Hillary was her own worst enemy and ran a poor campaign which was the primary reason she lost twice; first to Obama and then second to trump.

To claim now that Putin elected Trump is absurd; Putin is a ruthless tyrant and if he actually had all this information he wold have kept it to use against Hillary after she was elected as blackmail. Trowing that information away to supported elect trump would have don’t him little good as trump is the master negotiator and would have made a tougher world leader than Hillary so there was no upside to Putin supporting Trump and the argument falls apart!

Why I Oppose George Soros


Soros, I believe, is trying to do the same thing as Karl Marx. He is funding an experiment to alter society into what he thinks it should be. I believe in Adam Smith and the best way to help society is to rid it of people like Soros who think they have the right to reshape society into what they believe it should be. The invisible hand works fine and it is the essence of nature. People like Soros admit they do not believe in God, so that means they also assume the universe is theirs to manipulate and play the role of  God. People like Soros always want to rule the world through central planning. It is just not possible, for humanity is the inventor driven by the mother of everything — necessity — never the rulers.

lions-killing-elephantSorry, I have studied the world through the eyes of our clients globally, watching how we all act in our own self-interest just as animals in the wild also have a survival instinct. The design of nature is that one species survives by consuming another. The idea that we can create utopia where everyone enjoys perfect harmony is against the design of nature.

In trading, Soros was quick to recognize a currency peg that was against the natural cycle and thus was overvalued. He jumped on that currency and devoured it just like a lion. Then he wants to pretend to be God and make it an open society?

Soros needs to first study his own actions that are the same as a lion and its prey. He is not competent to judge the world while he bribes or supports politicians who will agree to his idea as long as he hands them the money.

Sorry, I believe in laissez-faire because the system is far too complicated for man to try to change it.

Mutually Beneficial Leverage – Nigel Farage Visits Trump Tower Today…


It is somewhat funny, perhaps quizzically so, that people cannot see the mutually beneficial play amid the strong relationship formed between Donald Trump and Nigel Farage.   Essentially and substa…

Source: Mutually Beneficial Leverage – Nigel Farage Visits Trump Tower Today…

trump-standing-in-gap411221112112111111121111111111111211

The Many Times Russian Hackers Didn’t Damage Hillary’s Campaign


WOW those Russians are real good!

Why Feminists Hate Men: What They Won’t Tell You!


Why Civilizations Rise and Fall | Michael Woodley of Menie and Stefan Molyneux


An Honest Conversation About Race and Gender Differences


The War Against Men | Tom Golden and Stefan Molyneux


“You Haven’t Succeeded Once”: State Department Slammed By AP Reporter Over Failure In Syria


Tyler Durden's picture

The battle for Aleppo is over, and Assad has won, with AP quoting the Syrian leader that “history is being made with the defeat” of the insurgents contained in the city.

Syrian President Bashar al-Assad said on Thursday the events taking place in the city of Aleppo are a historic moment, and said the world will be different after what he called the “liberation of Aleppo”.

“What is happening today is the writing of a history written by every Syrian citizen. The writing did not start today, it started six years ago when the crisis and war started against Syria,” Assad said in a video statement published on the Syrian Presidency’s Twitter account.

 

And while Syria and Russia enjoy the spoils from his biggest victory since the start of the Syrian conflict, the US State Department is being slammed for losing the Syrian proxy war. Meanwhile, after three years of backing and arming rebels brought no major progress in the Syrian war, Washington has accused Moscow of “failure” to achieve peace. Yesterday, the State Department was finally called out by AP on the lack of progress in Syria, forcing department spokespersons John Kirby to once again blame Russia.

As caught on the recording below, the daily briefing at the State Department started off with a verbal sparring match between AP reporter Brad Klapper and department spokesman John Kirby. Klapper asked Kirby why the US was “laying all the blame” for developments in Aleppo on Russia, while also questioning what Washington was doing different than Moscow. The US, Klapper said, “failed repeatedly, doing the same thing over and over again” but continued to accuse Russia of war crimes “when things go badly.”

“You [the US] haven’t succeeded once,” Klapper said.

Kirby did not answer the latter of Klapper’s questions, instead offering his explanation of why Russia bears responsibility. “The failure is on Russia for not putting the proper pressure on the Assad regime to stop the brutality, the gassing, the surrender, the starvation of their own people. That’s the real failure here,” Kirby said, claiming that the US, unlike Russia, has been pursuing only political solutions.

“You don’t think the US has failed?” the reporter continued to press on.

Refusing to take any blame for America’s actions, Kirby continued to dodge the question.

“You talked about the United States failure. What I would say is the international community has remained focused on trying to bring about a better outcome in Syria,” he said, stressing that the US “is a leader in that effort.”

Then several minutes into the exchange, Kirby would not admit the possibility of the US approach as it is failing to achieve a peaceful solution despite years of attempts.

“Secretary [of State John Kerry] would be the first to tell you that he’s enormously frustrated that we are still where we are with respect to what’s going on the ground in Syria. Nobody’s happy about that,” he said, praising Washington’s efforts on the diplomatic front.

After his response did not seem to satisfy Klapper, Kirby commented: “Look, you can shake your head in disgust about the answer all you want.”

Showing a sense of humor, Klapper argued that it was “too late” for any changes to be made given that the Obama administration and Secretary John Kerry’s tenures are coming to an end in just over a month.  “You’re not describing any different kind of approach or anything you’re going to do to somehow change the equation,” he said. “It’s too late for that. You have no time left and you’re saying you’re not going to telegraph something that we know is not going to happen.”

However, according to Kirby, despite what Klapper or the AP might “feel,” Secretary Kerry remains eager to try to find a political solution to the conflict.

Meanwhile, having taken over Aleppo, the Syrian proxy war is now in its final stages, with the Assad government, thanks to Russian backing, now assured a victory, especially since Trump has repeatedly stated that he is looking forward to de-escalating the middle east conflict, and no longer is looking to “change heads of state”, a development which will infuriate Qatar, whose gas pipeline to Europe appears doomed to never be constructed.