Monday, October 31, 2016

China's Blowing Out TED-Spread 
Has Traders Bracing For A Cash Shortage
Article highlights an emerging liquidity crisis in China .. "One place where the TED spread - ironically - is still a valid indicator of liquidity concerns, is oddly enough China. And it is in China where traders in the local interest-rate swap market are bracing for a cash shortage as a result of the blowout in the premium for the 1-year swap rate over the 1-year sovereign bond yield to 52 basis points, the widest since July 2015 .. How should one trade this reacceleration in Chinese capital outflows, Yuan devaluation and overall economic deterioration? One way, as Kyle Bass has done, is to short the Yuan outright, and in size. Another, as we did last September, and as Corriente's MarK Hart discussed in February, is simply to go long bitcoin - a trade that has returned over 200% in just over a year."
LINK HERE to the article

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