China's Liquidity Squeeze: Institutions Borrowing at 50% Rate
Overnight borrowing costs for some Chinese financial institutions surged to as high as 50% due to a squeeze in liquidity and stressed money markets. The cash shortage was attributed to a flood of upcoming government bond issuance and market fears of default by cash-strapped institutions. The jump in rates raised concerns and reminded traders of a similar cash crunch in 2013. Analysts expect authorities to implement monetary easing measures to address the tight liquidity situation.