China: It’s Not Me, It’s You

It’s one thing when the Fed hits the pause button.  It’s quite another when China, holder of $3.1 trillion in foreign-exchange reserves, hints that they might be a little overinvested.  Bloomberg reports that China is reconsidering its commitment to funding the US debt addiction.

And, that has stock and bond futures searching for a new equilibrium.  For starters, USDJPY plunged to our next downside target overnight.ES came within 9 points of our downside target for it.  And, EURUSD’s slide was halted at a backtest as we discussed yesterday.  DXY is clinging stubbornly to the channel bottom reached last week.  But, it remains to be seen whether or not it’ll hold.

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