A China Conspiracy Theory: “What If Beijing Is Behind The Entire Move?” SocGen Asks

Jon Alternative Media, Blogosphere, Economy, Fiscal Policies

As noted earlier, the return of the “Trump Trade”, however brief, on the back of tax reform euphoria and Hawkish Yellen has dominated market sentiment, resulting in the latest bond market “crash”, sending yields to a nearly three month high of 2.35% earlier this morning, and as Bill Blain showed in a chart, it took just three weeks to reverse the fall we saw in July and August, up 30bps in days, while Bunds are up 20bp and even JGBs are up 5bp (far greater rises in relative terms).

Meamwhile, the FX market has continued to shadow every tick in the bond market. The Dollar index reached its low point on 8 September, as EUR/USD spiked to just below 1.21. Since then the EUR/USD has fallen to levels not seen since mid-August, but that’s not a huge correction given that relative (real) yields are back to where they were in mid-May (when EUR/USD was under 1.11).

This post was published at Zero Hedge on Sep 28, 2017.