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Soaring dollar will lead to “explosive” market repricing

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Posted by ZeroHedge

on Friday, 25 May 2018 07:19

"A curious" event that took place about a month ago, aggravated by other "Big Changes" like the US considering tariffs on German, Japanese, North Korea cancelling the summit then virtually begging to reinstate, home prices “skyrocketing” while home sales fall, Bitcoin tumbling on news of DOJ probe into price manipulation there's more Big Change coming - R. Zurrer for Money Talks

Something curious took place one month ago when the PBOC announced on April 17 that it would cut the reserve requirement ratio (RRR) by 1% to ease financial conditions: it broke what until then had been a rangebound market for both the US Dollar and the US 10Y Treasury, sending both the dollar index and 10Y yields soaring...

10Y vs USD

... which led to an immediate tightening in financial conditions both domestically and around the globe, and which has - at least initially - manifested itself in a sharp repricing of emerging market risk, resulting in a plunge EM currencies, bonds and stocks.

2018-05-18 11-36-59

Adding to the market response, this violent move took place at the same time as geopolitical fears about Iran oil exports amid concerns about a new war in the middle east and Trump's nuclear deal pullout, sent oil soaring - with Brent rising above $80 this week for the first time since 2014 - a move which...

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