Authored by GoldFix ZH Edit
Isn’t it fascinating that the China-is-deflating narrative has come from out of nowhere to be the cause célèbre just as the BRICS Summit is approaching and as the Ukraine offensive fails? We don’t doubt the problem in China is real. It has been for years as observed here. But why focus on it now?
Literally out of nowhere at most firms. For the past 6 months all we have been hearing is… “China reopening is gonna boost commodities”. Then, with almost no transition period admitting “Well, it’s taking longer than we thought” they start hammering China on deflationary policies.It's almost as if the Banks were ignoring their being incorrect for 6 months and are now pivoting to blaming China for their not being able to see China’s problems. Jeff Currie also retired. Fancy that. Must read on the China situation here: China's Economy On "Verge Of Collapse"
Why note all this? Given the implosion of US Bonds, can the China thing be as bad as it is being made out to be? What are we missing if anything?
Super Tinfoil Hat Comment:
We are looking at the intersection of US Geopolitical interests and US Bank analysis interests more closely. This is how the US behaves in war going back to the first Iraqi war where we saw this pattern first in Gov't/ Big Oil logistics policy
Admittedly we are biased based on the turnaround in behavior of Biden towards Big Oil recently. But you gotta admit this all fits very snugly into a more Corporatist US economic push we identified early on with @BrynneKKelly last year. Anyway… all of a sudden people care about China more than normal and the BRICS meeting is coming very soon.. go figure.
Face Value.. US Bonds How?
Assume the China thing is *that* bad. Then other Geo-economic issues must be weighing on our Bonds even more so far. That implies other Geo-economic issues must be weighing on our Bonds even more so far. Maybe Japan manifesting as the leader in global rates is once again asserting itself? They set the ceiling on rates on the way down. Now they set the floor on the way back up.
Developing Geopolitical issues that will have an effect on markets
- Japan Yield YCC tweaking- implications for US YCC, Financial repression preview
- China’s inability to recover and their policy reaction to it- Will affect Fed hiking bias
- Ukraine counteroffensive failure and the pivot towards chatter of splitting Ukraine for NATO purposes- Whither Zelensky, build a new wall?
These on top of all the normal stuff we’re dealing with. Anyway.. the BRICS Summit is coming up
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