Bloomberg reports China Swaps Surge as Cash Squeeze Sees Demand Wane at Debt Sale. China’s one-year interest-rate swap rose by the most in 22 months as the central bank refrained from adding funds to the financial system to ease a cash squeeze, causing demand to fall at a government debt auction. “The cash shortage may get even worse before the quarter-end because banks will have to hoard cash to meet loan- ...

Bloomberg reports Brazilian Currency Touches Four-Year Low, Prompting Intervention Brazil’s real touched a four-year low, prompting the central bank to intervene for a second straight day as a report showed higher-than-forecast inflation. “If there’s more currency devaluation, there will be more inflation,” Jankiel Santos, the chief economist at Banco Espirito Santo de Investimento in Sao Paulo, said in a t ...

Via email here is another update from Michael Pettis at China Financial Markets. What follows is from Michael Pettis. Special points Europe is attempting to resolve domestic imbalances by forcing them onto their trade partners. This will end badly, especially for Germany. China’s new lending, exports, investment, housing starts and GDP growth all continued to slow in May. Many of the numbers came in well be ...