Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

China Pulls The Rug From Under Europe, Halts French Bank Transactions, Makes Good On Trade War Ultimatum

Courtesy of ZeroHedge. View original post here.

A flurry of headlines out of China suggest global macro-economic volatility may be ready to take it to the next level. We discussed last week how China’s oh-so-generous offer of help to Europe was merely a veiled threat playing US against Europe in a game of who-gets-the-funding. Well, tonight, it seems, they are making good on some of those threats. Aggravated by EU’s lack of market economy recognition, they pull trading lines with French banks, express concern at the EUR’s safety (preferring US Treasuries), and indicate a clear preference for bonds over stocks – all the while warning of growing trade tensions – consider the sabre-rattled.

Initial comments from Commerce Minister Shen:

*CHINA DISAPPOINTED EU HASN’T RECOGNIZED MARKET ECONOMY STATUS

*CHINA MARKET ECONOMY STATUS IS POLITICAL DECISION, SHEN SAYS 

*CHINA MARKET ECONOMY STATUS NOT TECHNICAL ISSUE, SHEN SAYS

*CHINA’S HELP TO EUROPE, MARKET STATUS HAVE NO DIRECT CONNECTION 

was quickly followed by the ‘threat/promise’: 

*MOFCOM’S SHEN: EU DEBT CRISIS MAY RAISE CHINA TRADE FRICTION

*CHINA MOFCOM IS CONDUCTING REVIEW OF NESTLE-HSU FU CHI DEAL 

Source: Bloomberg

and then Reuters reports:

A big market-making state bank in China’s onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday. 

The European banks include French lenders Societe Generale , Credit Agricole and BNP Paribas

"Apart from spot trading, all swaps and forwards trading (with the European banks) have been stopped," one source who is familiar with the matter told Reuters. 

 And the piece-de-resistance of the night was, again from Reuters:

China, the largest foreign holder of U.S. government debt, will keep buying U.S. Treasuries, the official People’s Daily, the ruling Communist Party’s mouthpiece reported on Tuesday, citing government researchers. 

In an article about the reasons for China’s increased purchase of U.S. Treasuries, the newspaper cited Yan Xiaona, a researcher with the Chinese Academy of Social Sciences, as saying that the dollar "is relatively safer than the euro" because of the unfolding sovereign debt crisis in Europe.

Furthermore, as if he had just read our earlier debt vs equity post:  

Wang Chaocai, a Ministry of Finance researcher, was quoted as saying that "what else we can buy if not U.S. Treasuries? It’s more risky to buy into equities."

It seems that China did not get the answer they wanted from the Europeans and just as we said last week, swung back in favor of the US – TSYs as opposed to stocks. China 3 – Europe 0 – US 1 is the approximate score in this first round perhaps.

Pic via So Much To Say


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!