Steno Signals #96 – A major devaluation of the CNY could be imminent
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China is preparing something BIG. That seems more and more obvious to me by the week now. The question is what that BIG thing is.
China reported a strong 5.2% YoY Q1 despite troubles on the ground, local financial institutions are hoarding bonds because of a weak credit demand growth picture and the Chinese authorities seem to be stockpiling like crazy.
We have seen plenty of tin-foil theories speculating in the reasons behind those Chinese actions, but maybe China is just preparing a major one-off devaluation of the CNY?
Let’s have a look at why a CNY devaluation is increasingly likely and how markets are likely to respond to such an event..
Chart 1: China is stockpiling copper like crazy
China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources. Could it be that they are preparing a major one-off devaluation of the CNY?
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