All eyes will be on the Shibor, or the Shanghai Interbank Offered Rate. This is the benchmark interest rate used in lending activities between banks. These rates underlie the mechanism that holds the Chinese banking system together.
Simply put, it’s a barometer of liquidity in the Chinese credit markets.
In recent periods, Shibor has been surging, stoking fears that Chinese credit was seizing up.
However, the People’s Bank of China has largely remained silent. Some analysts have suggested this inactivity is the PBoC’s way of passively reigning in what is already an overheated credit market.
Other’s are reminded of the dark days of the financial crisis, when surging LIBOR rates preceded the Lehman Brothers bankruptcy and the deepest periods of the financial crisis. They warn that if the PBoC, or some other force, doesn’t intervene soon, China will plunge into recession and take the rest of the global economy with it.
Shibor is updated every business day at 11:30 AM Beijing time, which is 11:30 PM ET. You can get updated numbers at Shibor.org.
For some historical context, here’s a long-term look at overnight Shibor:
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