Only 3 days left before the Fed raised interest rates in China or the first victim?
fed officials will hold its policy meeting December 15-16th, is widely expected to raise the Fed's benchmark federal funds rate 0.25%. The rate has been at a near-zero level unchanged since December 2008.
according to Barron's reported that Yellen, the Fed Chairman next week not only to decide whether to start raising interest rates for the first time in 10 years, but also to raise interest rates in the future on how to walk on the road to consider how international markets at ease. So-called international markets including China, of course.
the question now is, should China fear the Fed raise interest rates?
since 21 people remember 1994 this thing over the years is due to the global bond market, especially the Asian bond market. 1994 for the global bond market is a year want to forget as soon as possible.
in 1994, under Alan Greenspan's Federal Reserve interest rate hike cycle in excess of market expectations have killed Kidder Peabody company, makes the bankruptcy of Orange County, California, Mexico into chaos, and for three years after the Asian financial turmoil to buy the House. Traders refer to this as the bond market carnage. Short interest rates the Federal Reserve doubled lead directly to the bond market losses of 600 billion dollars, which was at that time a huge number of very shocking.
policy makers are still not forget the nightmare of the year. In 2013, the then Federal Reserve Chairman Ben Bernanke prepared to gradually withdraw from the zero interest rate policy, Korea's Central Bank Governor admitted that "the ghosts of 1994" still let him sleep. Goldman Sachs Chief Executive Officer Lloyd grace-Blankfein still couldn't help but look back on 1994 's mood. For example, Bank of America Merrill Lynch strategist Michael Hartnett was published entitled "1994 again" Institute reported.
Greenspan's interest rate shock in Asia because the Federal Reserve's decision to raise interest rates helped push up the dollar. Asian currencies pegged to the dollar, monetary policy is unable to guard, with dollar-denominated debt overwhelmed a number of companies. Baht under pressure from the rising dollar, first hook, substantial depreciation in the year 1997. Crisis spread to Jakarta from Bangkok to Seoul and then to Wall Street, even in 1998, Russia played a role in the event of default.
the question now is, the Fed will begin a new round of new tightening cycle, and do it all again? Odds are not great. Now Fed Chairman, Janet-yelunbigelinsipan more about the Fed's twin goals of the second target-achieving full employment. But global markets face a lot of difficult factors to measure: China. This factor does not exist in 1994. The world's second-largest economy is ready mixes of monetary policy normalization now? Us a lot of reason to worry that China is not ready to become the first victim of the Fed raising interest rates.