SHIBOR Is Skyrocketing; Could Be A Big Warning Sign

Early today, Rick Santelli pulled up a chart of SHIBOR on CNBC. ZeroHedge is also covering this story. Short-term interests rates in China are soaring, hitting multi-year highs. The volatility has been tremendous as SHIBOR has gone from 2.5% to 7.3% in a few short days.

The implications of this are fairly significant. As short-term liquidity is dried up in China, it could cause a significant slowdown in the red hot economy. It also may be indicating that Chinese banks are beginning to get nervous about lending to each other.

The consensus view right now is that the PRC is going to raise interest rates in February to try and get inflation under control. This cycle could be quicker and steeper than most market participants are expecting, and that could have major implications for the U.S. equity markets and cyclical and commodity names in particular.