People's Bank of China

On Friday, the PBoC said it would seek to keep the yuan’s exchange rate “basically stable” at reasonable and equilibrium levels and work to further promote RMB internationalization.

As we noted earlier today, the more China moves to “liberalize” exchange rates and financial markets, the worse things will be for global risk assets. After all, when something that has been perpetually manipulated is suddenly subjected to a semi-honest price discovery process, the “adjustment” is usually violent. China is a case in point.

As quick primer on China: the more something is "liberalized", the worse it is for local - and global - risk assets since all risk "assets" in China are so grotesquely manipulated, the resulting price discovery is always violent and spills over to the rest of the world as 2016 has so far demonstrated; alternatively, the more the government intervenes to stabilize any given asset, the better it is for local - and global - risk assets, as it means the distortion in price levels and capital allocation will continue at least a little longer, i.e., the proverbial can ki

A little over two months ago, when official PBOC data revealed that not only had Chinese reserve outflow slowed down, but actually posted an uptick in October, we warned that "Capital Is Still Flowing Out Of China, Here's How Beijing Is Hiding It", in which we explained that in taking a page from the western bankers' playbook, the Chinese central bank had shifted to less "traceable" forms of currency manipulation, namely via "forwards". To wit:

Less than a month ago, and just days after the Yuan was finally inducted into the IMF's hall of reserve currency fame, the Chinese Foreign Exchange Trade System, a part of the PBOC, made it very clear that what was about to happen would not be pretty, when it announced - in a statement which clearly everyone ignored - that going forward it would index the relative strength of the CNY not to the USD but the a basket of currencies (against which the USD to which it is pegged has been soaring).

With just two days left in 2015, the main driver of overnight global stocks and US equity futures remains the most familiar one of all of 2015 - crude oil, which, after its latest torrid bounce yesterday has resumed the familiar "yoyo" mode, and again stumbled dropping below $37 on yesterday's surprising API 2.9 million crude inventory build, as well several more long-term "forecasts" by OPEC members, with Kuwait now budgeting for $30 oil, while Venezuela's Maduro said the oil price fell to $28/bbl and is "headed downward."