When the going gets tough, true colors come out.
"China's money market rates jumped across the board on Monday as central bank data showed that foreign capital may have flowed out of China for the first time in four years, traders said
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Market watchers believe the reduction in October was related to the outflow of speculative capital, or hot money.
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In the third quarter, China’s capital and financial account surplus fell dramatically compared with the previous 2 quarter of this year, data from the State Administration of Foreign Exchange showed.
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Peng Wensheng, chief economist at China International Capital Corp., said that may reflect the uncertainties of EU debt and a liquidity squeeze among European banks."
http://www.businessweek.com/news/2011-11-22/china-reserve-ratio-cut-speculation-fueled-by-outflows.htmlThe appreciation of the Chinese yuan may be over, at least in the short-to-medium term.
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The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 4.07, compared with an average of 3.32 for the previous 10 sales. It was
the highest on record for a fixed-coupon Treasury note or bond, surpassing the previous high of 3.97 of $18 billion two- year notes in August 2007, at the start of the financial crisis, Treasury data show.
Actually, it was only the highest in 19 years, according to the WSJ.
Indirect bidders, an investor class that includes foreign central banks, purchased 42.2 percent of the notes, compared with an average of 31.8 percent for the past 10 sales. Direct bidders, non-primary dealer investors that place their bids directly with the Treasury, purchased 11.2 percent of the notes, compared with an average of 13.7 percent at the last 10 auctions.
http://www.businessweek.com/news/2011-11-22/treasuries-rise-as-european-crisis-u-s-impasse-buoy-auction.htmlThe indirect bidders mean foreign capital is flooding in.
