China Suspends Bond Market After "Abnormal Fluctuations"

China has suspended trading in its bond market for at least one Ministry of Finance-issued bond suffered "abnormal fluctuations" in the last two trading days.

The MOF 2021s dumped and pumped by almost 10 points in the last two days (and at the same time 5Y China bond futures rallied and fell notably...

The Shanghai Stock Exchange has suspended trading of the bond (Number 019535):

[The bond] is trading this morning with abnormal fluctuations. According to the relevant provisions of the "Shanghai Stock Exchange Trading Rules" and the "Shanghai Stock Exchange Securities Exception Trading Real-time Monitoring Rules", the firm decided to suspend treasury bonds from 11:00 on May 16, 2017 (019535).

From 20:17 on May 16, 2017 to resume trading.

We remind investors to pay attention to transaction risk, rational investment.

After the resumption of trading, if the bond transaction again abnormal fluctuations, the implementation of the second interim suspension of trading, suspension time lasted to 14:55 today.

One wonders if the delveraging is killing liquidity in the Treasury market now (as we have already seen the impact in the corporate bond market)

Chinese Stocks Are Plunging

Despite a liquidity injection and the rest of the world in "risk-on" mode over the French election results, Chinese markets are tumbling...

On Friday, we asked "Is China Trying To (Slowly) Burst Another Stock Market Bubble?" as Chinese monetray conditions were tightening dramatically...

And, as Bloomberg reports, it seems the catalyst is further crackdowns on shadow-banking.

China’s banking regulator, which said late Friday it will focus on guarding against financial risks, has ordered local units to assess cross-guaranteed loans, according to a Caixin report.

Having gone 86 trading days without a loss of more than 1% on a closing basis, the longest stretch since the market’s infancy in 1992...

It seems they might be... (or The National Team is going to have to work very hard today)...

As Shanghai Composite breaks below ist 200-day moving-average withe the biggest intraday drop since Dec 12th...

CHINEXT (China"s Nasdaq) is also getting hammered - testing its lowest levels since February 2015....