Top Tweets for #HIBOR

Developments are underway in the money market. Excess liquidity in the U.S. repo markets has been depleted. Simultaneously, the 1-month HIBOR continues its sharp rise today, completing an increase from 1% to 2.5% in just three days, as the HKMA persists in absorbing the liquidity it previously injected into the markets earlier this year. Meanwhile, the carry trade that fueled leverage in Wall Street over recent months is unwinding rapidly. Is the next phase deleveraging? #hkd #hibor #sofr #Liquidation

From Peg to Bubble: How Hong Kong is Funding Wall Street’s Next Crash?😳😳 The transformations in global supply chains continue to surprise with their impact on global liquidity flows. Following the surge in $TWD earlier this month, attention has now shifted to the $HKD in what appears to be one of the largest carry trades in decades. Is Wall Street heating up since the start of the month? Market liquidity is sharply rising at the expense of the HKMA. This is a recipe for a pump-and-dump scenario. Rewind to April—Trump escalates tariffs on China to levels that halt bilateral trade, impacting the exports of numerous Asian countries. The latest wave of dollar inflows from exports, arriving roughly at T+30 days, triggers an exceptional dollar surplus in Asia, sending the TWD soaring. However, recent developments surrounding the HKD are far more extraordinary. In 2005, Hong Kong’s central bank established an asymmetric band of 7.75–7.85 for the local currency against the dollar, with a clear commitment to intervene at both ends. This is one of the world’s oldest and most stable peg mechanisms. The dollar surplus in Asia did not bypass Hong Kong. Early this month, the HKD hit the lower band, forcing the HKMA to intervene by purchasing dollars from the market. How did it execute these purchases? By printing HKD into the banking system without sterilizing the injection through the issuance of Exchange Fund Bills/Notes (EFBN). The result: the banking system’s Aggregate Balance surged within days from HKD 44 billion to HKD 174 billion. This liquidity glut caused the overnight HIBOR, which stood at 4.5% at the end of April, to plummet to just 0.03% today. It doesn’t end there: Trump’s subsequent reduction of tariffs on China has increased dollar demand in the basis market while simultaneously boosting spot demand for HKD, further exacerbating the imbalance. These events create fertile ground for an asset bubble in Wall Street. Leveraged hedge funds typically secure overnight funding through U.S. repo markets, paying SOFR. Now, they can borrow at 0.03%, convert to dollars, and invest in U.S. assets like Treasury bills. With moderate leverage, they can easily achieve a near-risk-free annualized return of 15%. But why stop at bills? Investing in equities (NVDA, PLTR) shortens the path to inflating an asset bubble. Hedge funds are no longer borrowing at SOFR—they’re borrowing at near-zero in Hong Kong. With FX conversion, they're pouring into U.S. assets, from Treasuries to tech equities. This asymmetry in funding costs creates a distorted feedback loop: liquidity fuels leverage, leverage fuels asset prices. When the HKMA eventually tightens—by issuing EFBNs or raising intervention thresholds—it won’t just be a local adjustment. It could be the pin. #TechStocks #HKDCarryTrade #HIBOR #LiquidityAsymmetry #CarryTrade #FXMarkets #Tariffs