Zero Hedge

Has China Become The New Risk-Free Rate?

Has China Become The New Risk-Free Rate?

Authored by Charles de Quinsonas via BondVigilantes.com,

On 5th November China issued $4 billion worth of US dollar (USD)-denominated bonds split across two equal tranches.

The orderbook was $161 billion at one point, but ended near $118 billion when final pricing was announced. The 3-year $2 billion tranche priced at US Treasury + 0bp (aka flat to UST) and the 5-year $2 billion tranche priced at US Treasury +2bp.

The following morning, bonds traded up significantly and were quoted more than 30bp inside UST (specifically: China 28s -33.5bp  | China 30s -37.5bp).

This is unusual.

Looking at other high-credit quality sovereign issuers in US Dollar, South Korea 30s (AA-rated) trade at T+5bp, Abu Dhabi 30s (AA-rated) trade at T+10bp, or Qatar 30s (AA-rated) trade T+18bp. China is A+ rated so, on paper, its creditworthiness is assessed as weaker than South Korea or Qatar, and in this case AA-rated USA.

So, what’s so special about China?

“Has it become the new risk-free rate” asked one of my colleagues?

A natural tendency would be to think that China’s stability has become a new safe haven considering the year-to-date deterioration of the US institutions and creditworthiness.

The new US administration, the weaker US dollar, the threat to Fed independence, the ongoing government shut-down and the constant tariff noise may be an easy cocktail of answers as to why China trades inside the US.

However, the argument does not stand.

In November 2024, China issued $750 million of 5-year USD denominated bonds at T+3bp and they have been trading 30bp or more inside the Treasuries since then. Therefore, the perceived weakening US exceptionalism is hardly an explanation because mid-November last year very few investors would have anticipated the events that unfolded since the US Presidential election.

Source: Bloomberg (10 November 2025).

As often with bond trading, when the fundamental picture is failing to explain bond trends or moves, the technical picture may bring some colour.

Firstly, China has little external debt in USD so there is scarcity of bonds on offer.

In contrast, Chinese banks are flush with US dollar deposits, so there is demand for USD assets.

The alternatives to USD-denominated Chinese government bonds are not attractive because state-owned enterprise US dollar debt in China is rather expensive, and credit spreads in other IG names are close to their all-time tights.

Secondly, there’s a (complex) tax rebate system that some onshore bank clients benefit from on bond income.

The orderbook statistics showed that Asia accounted for 53% of last week’s book by geography type and banks for 33% by investor type.

The supply/demand imbalance, coupled with the tax rebate means you get strong technicals for the newly issued dollar bonds.

In addition, central banks, sovereign wealth funds and institutions – which tend to closely hold bonds – accounted for 26% of the orderbook.

This should have helped secondary market trading.

All of which led to robust performance and trading well inside the UST curve.

China recently unveiled plans to sell up to €4 billion of euro-denominated bonds later this month, but the above technical picture does not seem to apply to China’s Euro-denominated curve. China euro 5-year bonds, using CHINA 0 ¼ 11/25/30, have been trading between +20 and +40bps over the equivalent German Bund. China has not made it yet to the new risk-free rate.

Tyler Durden Tue, 11/11/2025 - 06:30

India Races To Replace Russian Oil With US, Iraqi, & UAE Crude

India Races To Replace Russian Oil With US, Iraqi, & UAE Crude

Authored by Irina Slav via OilPrice.com,

Two Indian refiners bought a total of 5 million barrels of crude oil from the United States, Iraq, and the UAE on the spot market as they seek alternatives to Russian crude.

Reuters reported, citing unnamed industry sources, that Hindustan Petroleum Corp. had bought 2 million barrels of West Texas Intermediate and 2 million barrels of Murban crude for delivery in January.

The other refiner, Mangalore Refinery and Petrochemicals, bought 1 million barrels of Basra Medium, also to be delivered in January, the Reuters sources said.

The search for alternative oil supplies follows the Trump administration’s decision last month to sanction Rosneft and Lukoil, which together account for half of Russia’s oil exports and a significant portion of Indian imports from the country.

The sanctions ignited a rush to secure supplies ahead of the entry into effect of the sanctions, on November 21, while oil buyers look for loopholes to keep their access to discounted Russian crude.

Meanwhile, Bloomberg reported an unusual move by two tankers, both sanctioned by the European Union and the UK, which performed a ship-to-ship transfer off the Indian coast last week.

One of the tankers, the Ailana, had been idling for a couple of weeks prior to the transfer, Bloomberg wrote, noting that after the transfer, the receiving tanker, Fortis, continued to the Indian port of Kochi, while the Ailana set off for Russia.

In separate but related news, India’s president, Droupadi Murmu, said Indian oil and gas companies were seeking long-term relationships with Angolan energy entities, interested in investing both in energy commodities and in critical minerals.

“Angola's role in India's energy security is very important. India is a major buyer of Angola's oil and gas. Our oil and gas companies are desirous of entering into a long-term purchase contract with Angola,” Murmu said during a state visit to the West African country.

Tyler Durden Tue, 11/11/2025 - 05:00

India Races To Replace Russian Oil With US, Iraqi, & UAE Crude

India Races To Replace Russian Oil With US, Iraqi, & UAE Crude

Authored by Irina Slav via OilPrice.com,

Two Indian refiners bought a total of 5 million barrels of crude oil from the United States, Iraq, and the UAE on the spot market as they seek alternatives to Russian crude.

Reuters reported, citing unnamed industry sources, that Hindustan Petroleum Corp. had bought 2 million barrels of West Texas Intermediate and 2 million barrels of Murban crude for delivery in January.

The other refiner, Mangalore Refinery and Petrochemicals, bought 1 million barrels of Basra Medium, also to be delivered in January, the Reuters sources said.

The search for alternative oil supplies follows the Trump administration’s decision last month to sanction Rosneft and Lukoil, which together account for half of Russia’s oil exports and a significant portion of Indian imports from the country.

The sanctions ignited a rush to secure supplies ahead of the entry into effect of the sanctions, on November 21, while oil buyers look for loopholes to keep their access to discounted Russian crude.

Meanwhile, Bloomberg reported an unusual move by two tankers, both sanctioned by the European Union and the UK, which performed a ship-to-ship transfer off the Indian coast last week.

One of the tankers, the Ailana, had been idling for a couple of weeks prior to the transfer, Bloomberg wrote, noting that after the transfer, the receiving tanker, Fortis, continued to the Indian port of Kochi, while the Ailana set off for Russia.

In separate but related news, India’s president, Droupadi Murmu, said Indian oil and gas companies were seeking long-term relationships with Angolan energy entities, interested in investing both in energy commodities and in critical minerals.

“Angola's role in India's energy security is very important. India is a major buyer of Angola's oil and gas. Our oil and gas companies are desirous of entering into a long-term purchase contract with Angola,” Murmu said during a state visit to the West African country.

Tyler Durden Tue, 11/11/2025 - 05:00

"We May Have To Evacuate Tehran": Iranian President's Remarks Stun Amid Water Crisis

"We May Have To Evacuate Tehran": Iranian President's Remarks Stun Amid Water Crisis

Coming off a very 'hot' geopolitical summer which saw Israel and the US attack Tehran and the Islamic Republic's nuclear energy facilities, Iran is now facing yet another immensely threatening crisis amid historic drought: lack of water for the population of 90+ million.

Rainfall has been at record lows, causing reservoirs to be nearly empty, in an already arid Middle East climate. The situation has grown so acute that President Masoud Pezeshkian has warned that if the drought persists for another month, Tehran's water would have to be rationed. But this appears to be happening currently, as no rain is expected for at least the next ten days.

Via Iran News Update

Already Iranians are being urged to conserve water and only use what's available for the most pressing needs. Pezeshkian has actually said something stunning and unprecedented on Monday, though some are describing it as obvious hyperbole: 

"If rationing doesn't work," Pezeshkian said, "we may have to evacuate Tehran."

The alarming statement resulted in an avalanche of criticism in Iranian media, also with former Tehran mayor Gholamhossein Karbaschi dismissing the idea as "a joke" and saying that "evacuating Tehran makes no sense at all".

Some regional analysts and officials report an over 90% decrease in rainfall compared with last year. The NY Times summarizes of how dire the situation is:

Iran’s officials have begun rationing water in the capital, Tehran, amid a drought so severe that the president has warned the capital may need to be evacuated.

The country is facing the worst drought in six decades, and major dams are at critically low levels. Water authorities this week said the main dams feeding Tehran, on which more than 10 million people depend, were at 5 percent capacity.

On Sunday, the spokesman for Iran’s water industry, Isa Bozorgzadeh, told reporters that water pressure would be lowered from midnight until the morning “so that we can both reduce urban leakage and create an opportunity for city reservoirs to refill.”

People have in some cases taken to TikTok and other social media to show that faucets in their homes have stopped producing water for hours at a time.

Iranian officials are mulling extreme measures and outside-the-box approaches:

This fall, the Ministry of Energy announced the practice of “cloud seeding,” a weather modification technique that involves dispersing particles like silver iodide into existing clouds to encourage rainfall. However, for it to work, clouds need to contain at least 50 percent moisture, which experts say is not currently the case in Iran.

BBC writes of one vital reservoir, "The manager of the Latian Dam, one of Tehran's main water sources, says it now holds less than 10% of its capacity. The nearby Karaj Dam — which supplies water to both Tehran and Alborz provinces — is in a similarly dire condition."

"I have never seen this dam so empty since I was born," one area resident told Iranian state TV.

Tyler Durden Tue, 11/11/2025 - 04:15

"We May Have To Evacuate Tehran": Iranian President's Remarks Stun Amid Water Crisis

"We May Have To Evacuate Tehran": Iranian President's Remarks Stun Amid Water Crisis

Coming off a very 'hot' geopolitical summer which saw Israel and the US attack Tehran and the Islamic Republic's nuclear energy facilities, Iran is now facing yet another immensely threatening crisis amid historic drought: lack of water for the population of 90+ million.

Rainfall has been at record lows, causing reservoirs to be nearly empty, in an already arid Middle East climate. The situation has grown so acute that President Masoud Pezeshkian has warned that if the drought persists for another month, Tehran's water would have to be rationed. But this appears to be happening currently, as no rain is expected for at least the next ten days.

Via Iran News Update

Already Iranians are being urged to conserve water and only use what's available for the most pressing needs. Pezeshkian has actually said something stunning and unprecedented on Monday, though some are describing it as obvious hyperbole: 

"If rationing doesn't work," Pezeshkian said, "we may have to evacuate Tehran."

The alarming statement resulted in an avalanche of criticism in Iranian media, also with former Tehran mayor Gholamhossein Karbaschi dismissing the idea as "a joke" and saying that "evacuating Tehran makes no sense at all".

Some regional analysts and officials report an over 90% decrease in rainfall compared with last year. The NY Times summarizes of how dire the situation is:

Iran’s officials have begun rationing water in the capital, Tehran, amid a drought so severe that the president has warned the capital may need to be evacuated.

The country is facing the worst drought in six decades, and major dams are at critically low levels. Water authorities this week said the main dams feeding Tehran, on which more than 10 million people depend, were at 5 percent capacity.

On Sunday, the spokesman for Iran’s water industry, Isa Bozorgzadeh, told reporters that water pressure would be lowered from midnight until the morning “so that we can both reduce urban leakage and create an opportunity for city reservoirs to refill.”

People have in some cases taken to TikTok and other social media to show that faucets in their homes have stopped producing water for hours at a time.

Iranian officials are mulling extreme measures and outside-the-box approaches:

This fall, the Ministry of Energy announced the practice of “cloud seeding,” a weather modification technique that involves dispersing particles like silver iodide into existing clouds to encourage rainfall. However, for it to work, clouds need to contain at least 50 percent moisture, which experts say is not currently the case in Iran.

BBC writes of one vital reservoir, "The manager of the Latian Dam, one of Tehran's main water sources, says it now holds less than 10% of its capacity. The nearby Karaj Dam — which supplies water to both Tehran and Alborz provinces — is in a similarly dire condition."

"I have never seen this dam so empty since I was born," one area resident told Iranian state TV.

Tyler Durden Tue, 11/11/2025 - 04:15

Epoch Of Change

Epoch Of Change

Authored by T.L.Davis via Substack,

I hope people are recognizing that they live in a very volatile world.

Growing up in the 60s-70s it was pretty tame. There was the Vietnam war and war protesters, there was the free-love movement, feminism and other cultural changes taking place, but the whole world was not aflame as it is now. This could only be brought about by a worldwide effort to throw it into chaos.

Chaos is the enemy of the capitalist and friend of the communist. It’s during chaos that communism can provide answers to the problems they’ve caused. But back in the 70s and 80s a lot could go on without notice. A person just working their job might not know it was happening. Today, every shiver and shrug of culture is noted, recorded and broadcast over the internet. To be ignorant of the issues today takes an intentional willingness, a refusal to be shoved out of their bliss. There is something to be said for that, even.

One of the things we advocated in the documentary Deconstruction is taking place right before our eyes. Anti-immigration countries are banding together into a solid block within the EU and the stronger they get, the more will want to join.

It’s a civil war that’s taking place, but not with weapons, with common sense and rational thinking challenging the tyrannical rule of a small group of communist bureaucrats in the EU.

I’m proud of our documentary for raising the important issues at such a crucial time. But this isn’t the end. There are only 4 or 5 of the 27 EU nations signing on to this, so there’s plenty of work to do.

Why is it important to me, or you, that this is taking place a world away? It has to do with national security, cultural restoration and the survival of civilization. The great works of art, of progress and a sense of building something for the future rests on the nations from whence we all came at some time or another.

What’s happening in the EU is the product of the globalists and the stronger they get, the weaker we are as a nation. The US is already suffering from the effects of a declining power. Its ability to produce a functional weapons system has been destroyed by the weapons bureaucracy. One might even think, through the woke military of so many years, even decades, that it’s actually sabotage that’s taken place.

The economy is a whisp of smoke and the arrangement of mirrors, the climbing GDP and such merely an inverted down-stepping chart. During Biden’s years government spending topped the GDP, trillions of printed dollars, suggesting that the GDP was keeping pace with debt, but one was fueling the other.

The point is, the focus of America was lost sometime back in the 1970s, when Nixon took the dollar off of the gold standard. It may not seem connected, but from that point onward, wages have declined while the amount paid in fiat dollars might rise, the standard of living decreases. How it’s connected, at least in my own thoughts, is that once the dollar was taken off of the gold standard, the nation became, especially in the upper echelons, focused on wealth retention rather than wealth building. Crypto is nothing less than a means to achieve that, though its dependence on electricity to make it work bothers me.

Inventions almost literally stopped about the same time and wringing more dollars out of the same technology became the intent of manufacturing. Cell phones are just radios, computers are now smaller and faster, but still work off of the original concept in the 1950s. Aircraft are still aircraft, drones are still aircraft, missiles, even the hypersonic ones, are not new technology. Automobiles, no matter how advanced or cool are no different, not even the self-driving ones. In fact, a lot of the things we find in our cars are not there for any other reason than to track the vehicle and bug it for meanspeak that will be important later after the social credit score kicks in. I prefer my 1996 F-150 to any of them and my 1985 diesel to it.

Is it any wonder that it seems like a reckoning must take place?

That allowing industries and government to control our lives is a bad idea?

That is fascism, by definition, unless they’ve changed the definition to mean anything “right,” which I think they have.

This is an epoch of change, some very drastic changes.

It’s a moment of revolution against the system on a global scale; a system that has taken whole populations and subjected them to cruel and malevolent punishment for being white, or European, or Christian. And that’s where this finally boils down to a civilizational battle.

In a world flooded by Islamists, who naturally reject the host nations and establish islands of Islam in seas of Christianity, it has to come down to a religious battle.

Right now, it’s a battle of driving more troops into Europe, or driving them out of the UK, France and Germany, in Sweden and Denmark. Hungary, Slovakia, Poland and the Czech Republic are pushing back against the experiment that has gone awry in Western Europe and attempting to keep the migrants out to start with, not because they hate migrants, but because, unlike Western Europe, they value their culture and religion.

America can draw strength from the Central and Eastern European bloc that has rejected illegal immigration rather than build a complete apparatus to deport those already there. One can understand it either as a religious battle, or a battle against communists, it works either way, because the Islamists are communists in drag. They are the communist shock troops and once the worldwide caliphate is established communism will simply slip away into the darkness of history, morphed into a religious, patriarchal tyranny.

It is the duty, in my mind, to stop it; to stop communism, Islam and anything that threatens the freedoms we’ve had in the past. I thought that would have been done by technology, that the advance of technology would create a world of individualists and it has that power to do so, but it has been coopted to become a weapon against the individual, promising security.

Anything is possible in this world, anything. All it takes is a concerted effort to achieve it. Focusing that intent is the hard part, but the lines are being drawn more definitively every day. This is the time to do it.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of ZeroHedge.

Tyler Durden Tue, 11/11/2025 - 03:30

Epoch Of Change

Epoch Of Change

Authored by T.L.Davis via Substack,

I hope people are recognizing that they live in a very volatile world.

Growing up in the 60s-70s it was pretty tame. There was the Vietnam war and war protesters, there was the free-love movement, feminism and other cultural changes taking place, but the whole world was not aflame as it is now. This could only be brought about by a worldwide effort to throw it into chaos.

Chaos is the enemy of the capitalist and friend of the communist. It’s during chaos that communism can provide answers to the problems they’ve caused. But back in the 70s and 80s a lot could go on without notice. A person just working their job might not know it was happening. Today, every shiver and shrug of culture is noted, recorded and broadcast over the internet. To be ignorant of the issues today takes an intentional willingness, a refusal to be shoved out of their bliss. There is something to be said for that, even.

One of the things we advocated in the documentary Deconstruction is taking place right before our eyes. Anti-immigration countries are banding together into a solid block within the EU and the stronger they get, the more will want to join.

It’s a civil war that’s taking place, but not with weapons, with common sense and rational thinking challenging the tyrannical rule of a small group of communist bureaucrats in the EU.

I’m proud of our documentary for raising the important issues at such a crucial time. But this isn’t the end. There are only 4 or 5 of the 27 EU nations signing on to this, so there’s plenty of work to do.

Why is it important to me, or you, that this is taking place a world away? It has to do with national security, cultural restoration and the survival of civilization. The great works of art, of progress and a sense of building something for the future rests on the nations from whence we all came at some time or another.

What’s happening in the EU is the product of the globalists and the stronger they get, the weaker we are as a nation. The US is already suffering from the effects of a declining power. Its ability to produce a functional weapons system has been destroyed by the weapons bureaucracy. One might even think, through the woke military of so many years, even decades, that it’s actually sabotage that’s taken place.

The economy is a whisp of smoke and the arrangement of mirrors, the climbing GDP and such merely an inverted down-stepping chart. During Biden’s years government spending topped the GDP, trillions of printed dollars, suggesting that the GDP was keeping pace with debt, but one was fueling the other.

The point is, the focus of America was lost sometime back in the 1970s, when Nixon took the dollar off of the gold standard. It may not seem connected, but from that point onward, wages have declined while the amount paid in fiat dollars might rise, the standard of living decreases. How it’s connected, at least in my own thoughts, is that once the dollar was taken off of the gold standard, the nation became, especially in the upper echelons, focused on wealth retention rather than wealth building. Crypto is nothing less than a means to achieve that, though its dependence on electricity to make it work bothers me.

Inventions almost literally stopped about the same time and wringing more dollars out of the same technology became the intent of manufacturing. Cell phones are just radios, computers are now smaller and faster, but still work off of the original concept in the 1950s. Aircraft are still aircraft, drones are still aircraft, missiles, even the hypersonic ones, are not new technology. Automobiles, no matter how advanced or cool are no different, not even the self-driving ones. In fact, a lot of the things we find in our cars are not there for any other reason than to track the vehicle and bug it for meanspeak that will be important later after the social credit score kicks in. I prefer my 1996 F-150 to any of them and my 1985 diesel to it.

Is it any wonder that it seems like a reckoning must take place?

That allowing industries and government to control our lives is a bad idea?

That is fascism, by definition, unless they’ve changed the definition to mean anything “right,” which I think they have.

This is an epoch of change, some very drastic changes.

It’s a moment of revolution against the system on a global scale; a system that has taken whole populations and subjected them to cruel and malevolent punishment for being white, or European, or Christian. And that’s where this finally boils down to a civilizational battle.

In a world flooded by Islamists, who naturally reject the host nations and establish islands of Islam in seas of Christianity, it has to come down to a religious battle.

Right now, it’s a battle of driving more troops into Europe, or driving them out of the UK, France and Germany, in Sweden and Denmark. Hungary, Slovakia, Poland and the Czech Republic are pushing back against the experiment that has gone awry in Western Europe and attempting to keep the migrants out to start with, not because they hate migrants, but because, unlike Western Europe, they value their culture and religion.

America can draw strength from the Central and Eastern European bloc that has rejected illegal immigration rather than build a complete apparatus to deport those already there. One can understand it either as a religious battle, or a battle against communists, it works either way, because the Islamists are communists in drag. They are the communist shock troops and once the worldwide caliphate is established communism will simply slip away into the darkness of history, morphed into a religious, patriarchal tyranny.

It is the duty, in my mind, to stop it; to stop communism, Islam and anything that threatens the freedoms we’ve had in the past. I thought that would have been done by technology, that the advance of technology would create a world of individualists and it has that power to do so, but it has been coopted to become a weapon against the individual, promising security.

Anything is possible in this world, anything. All it takes is a concerted effort to achieve it. Focusing that intent is the hard part, but the lines are being drawn more definitively every day. This is the time to do it.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of ZeroHedge.

Tyler Durden Tue, 11/11/2025 - 03:30

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