China is managing the wrong currency. Carry trade unwind vortex visualized. Selling begets selling as repayment cost rises every day...
One year Yuan losses relative to Yen far exceed losses relative to the dollar: -19% versus -6%...
Why is USDJPY imploding Yen / Yuan? Because the Yen was already strengthening against the dollar despite massively divergent Central Bank policy. Therefore, today's implosion in Treasury yields will accelerate the decline of USDJPY. And since Yuan is quasi-pegged to USD, as we saw today, that decline will be accelerated as well.
This implies acceleration to the downside for USDJPY (black):
Therefore, the USD/CNY pairing is a side show to the massive pressure now on Yen / Yuan. Which we saw today vis-a-vis the massive -1.86% decline (above).
All of which portends badly for "RISK".
USDJPY was down -2.12% today
US Dollar Index against all currencies
U.S. 30-year Treasury yields