Capitalogix

Chinese Yuan Enters Top 10 Most-Traded Currencies

The Chinese yuan has vaulted into the Top-10 of most frequently traded currencies for the first time, the Bank for International Settlements said in its foreign exchange survey.

In a rapidly growing global currency business, which now generates $5.3 trillion a day in flows, up from $4 trillion in 2010, the yuan climbed to ninth place from 17th three years ago ... and up from the mid 30s in 2001.

 

Clearly, this is a trend worth noting.

Related articles

Every Politician Who Whines About China Undervaluing Its Currency Needs To Look At This Chart

Singapore Overtakes Japan as Asia's Top Foreign-Exchange Hub - Bloomberg

Bank for International Setttlements: Yuan now one of world's most tradable currencies

Here Are Some Links for Your Weekend Reading

Sometimes confusion precedes a breakthrough - other times ...

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• Fail Cheaper, Fail Better. (NYTimes Bits)
• Stop Telling Your Employees What to Do. (HBR)
• Carl Sagan on the Meaning of Life. (Brainpickings)
• In Japan, Adult Diapers Are Expected to Outsell Infant Diapers by 2020. (TheGist)
• What English Sounds Like Foreigners. (BusinessInsider)

 

Trading Links:

• 3 Reasons Markets Should Expect A September To Remember. The perfect storm? (The Week)
• Lew Tells Congress Treasury to Hit Debt Limit in Mid-October. (Bloomberg)
• Like Betting On a Horse Race After It's Over. How HFT affects the average investor.  (CNN)
• Attack on Syria Could Start CyberWar. Expanded their hacking attacks expected. (Money)
• Obama's Tightrope Walk. The World both demands that he do something, yet will condemn him for doing it. | (Stratfor)

Big Outflows: Flight to Safety - or Just Temporarily Spooked?

Talk about a flight to safety ...  August saw the biggest cash withdrawal from all U.S. exchange-traded funds in over three years.  Likewise, scared investors triggered the largest outflows from US equity funds in the last five years.  

Think of it as a flight to cash as retail investors dump risk assets.

The question is whether this marks the beginning of a new trend, or just nimble trading in the face of perceived danger?

Joshua Brown, who blogs under the moniker "The Reformed Broker," tries to put things in perspective with this handy guide to market pull-backs. 

 

 

With less than a five percent pull-back, it is a little early to trot out words like "correction."

As to whether we could see a correction (or worse, a bear market or even a crash), the answer is that it is always possible. Nonetheless, most corrections do not become crashes, and over time, every single one of them turned out to have been great buying opportunities.

Apparently not everyone is worried. 

According to Bespoke's Bank and Broker CDS (credit default swap) Index, however, credit traders do not seem too worried.  

The chart below measures default risk for the major financial firms around the world.  Default risk for the financials typically spikes when stocks fall and vice versa.

 

 

 

Throughout 2013, the credit markets have become as comfortable with financial stocks as they've been since before the financial crisis of 2008/09.  During the stock market pullback we saw in June, default risk picked up a bit, but during the most recent pullback, we've seen default risk trade sideways.  Over the last month, the S&P 500 Financial sector is down 4.47%, but Bespoke's CDS Index is actually down 0.45% as well.  So, for whatever the reason, the credit markets don't think there's reason to be concerned just yet.

What about you?