The China Panic Trade Is Back
"The risk-aversion sparked by China in January is on course for an imminent replay unless the trend of the weakening yuan amid a strengthening dollar is checked."
Recall that stocks decoupled from the Yen carry trade in late February following the tacit "Shanghai Accord" at the G20 Finance meeting. That gave China a few months' breather courtesy of a weaker US dollar. That accord just ended today...
Now, the question on the table is which way does this divergence resolve. We know what time, ~2am Eastern Daylight when liquidity is at a low point.
Dollar / Yen (red) with S&P:
China has a headstart on continuing devaluation of the Yuan:
Chinese stocks:
