“Everyone Is Nervous” – Chinese Bond Bloodbath Reawakens As Hong Kong Stocks Turn Red For 2016

After a brief respite, the bloodbath in Chinese bonds is back, with futures plunging back to lows overnight amid liquidity fears (short-term lending rates are inverted) and growing anxiety over China’s almost unprecedented debtload.
As The Wall Street Journal reports, a gradual tightening of short-term credit by China’s central bank – combined with rumors of liquidity squeezes at brokers – prompted a mini-rout in the country’s $8 trillion-plus bond market last week, forcing authorities to reverse course and inject some $86 billion in short- and medium-term funds.
China’s total debt surged to around $27 trillion this year, or 260% of gross domestic product, compared with 154% in 2008 at the start of a stimulus program to offset the financial crisis. It is continuing to grow at more than twice the pace of the economy.

This post was published at Zero Hedge on Dec 19, 2016.