"If The Fool persists in his Folly he will become wise." - William Blake
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China Interbank Market Freezes As Overnight Repo Explodes To 25%
It seems liquidity (or counterparty mistrust) is beginning to reach extreme levels in China as the nation's banking system is now quoting overnight repo transactions at 25%. The explosion in funding costs echoes the collapse in trust (and surge in TED spread) among US banks in the run-up to the Lehman bankruptcy. MSCI Asia-Pac stocks are down over 3% with China's Shanghai Composite -2.5% at seven-month lows. China’s 1-day Repo Rate Climbs to Highest Since at Least 2006 MNI - CHINA OVERNIGHT REPO FIXING AT RECORD HIGH China's bond market is also collapsing: Yield on 3.1% govt bonds due January 2016 jumps 39 bps to ... (full story)