here is the link to the article. this happened yesterday. nice MOnday surprise for the markets.
cnbc news
China central bank raises Bank reserve requirements
Started by
skott
, Apr 07 2007 09:00 AM
6 replies to this topic
#2
skott
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Posted 07 April 2007 - 12:24 PM
looks to me like they are desperately trying to do something over there. slow the economy? prick a bubble? fight inflation? kill the us dollar? squell protectionism in the usa buying raising the value of the yuan? Speculation is rampant in China now.
#3
NAV
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Posted 07 April 2007 - 12:42 PM
Same story with India last Friday. Indian central bank raised the cash reserve ratio on friday after market close and the following Monday there was a carnage on the BSE. U.S markets yawned at this affair basically ! :yawn:
#4
jmicou
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Posted 07 April 2007 - 12:52 PM
looks to me like they are desperately trying to do something over there. slow the economy? prick a bubble? fight inflation? kill the us dollar? squell protectionism in the usa buying raising the value of the yuan? Speculation is rampant in China now.
China has not been secretive in its desire to moderate speculation while maintaining growth so as to avoid problems due to inflation.
#5
skott
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Posted 07 April 2007 - 01:17 PM
the market may yawn at this too but recall that what caused the US market to have it's worst breath ratio day since 1926 (498 down 2 up on feb 27) and 7th biggest point down day in history was the China market dropping hard........ not the Indian market.
#6
jmicou
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Posted 07 April 2007 - 02:07 PM
It may be more complicated than one of China's pullbacks. There was negative divergences to the internals, (such as the DOW MCSUM and so forth), the sub-prime uneasiness, and the the USD/JPY spike lower.the market may yawn at this too but recall that what caused the US market to have it's worst breath ratio day since 1926 (498 down 2 up on feb 27) and 7th biggest point down day in history was the China market dropping hard........ not the Indian market.
Edited by jmicou, 07 April 2007 - 02:08 PM.
#7
arbman
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Posted 07 April 2007 - 10:49 PM
I guess the countries owning the largest amount of US Treasuries (UST) are the biggest external factors effecting the US markets. At this point, Japan and China are the largest ones, followed by the OPEC countries and United Kingdom. Japan is not accumulating the UST anymore, OPEC countries sold some last year, instead these got replaced by China for the most part --we see Korea, UK and some of the other European countries buying a bit lately too. So a slow down in China or pop of their market will prevent the Chinese gov't from accumulating the UST as aggressively as they did since 2001. The rate of the foreign ownership of the UST peaked in 2005 at 47%, and flat in 2006. We do not know what will happen about the 2007 yet, but from the looks of it, they are not eager to own any faster than they've been currently buying...
