HONG KONG (MarketWatch) — Markets in Hong Kong and China are bracing themselves for another dose of Federal Reserve chief Ben Bernanke’s rate-cut medicine this week in the aftermath of the Bear Stearns bailout. Last week revealed that the Fed’s emergency rate cuts in January — which opened up a 50-basis-points negative spread between money-market rates in the U. The result is China will be facing more policy headaches over its inflation problem, with little room to maneuver on raising interest rates and yet more pressure to let its currency rise. Continuing on this theme, Nomura says that despite China’s strong headline liquidity data, inflation-adjusted money supply is now contracting sharply — bad news, as the money available for investing in financial assets is deteriorating. So has the new carry trade — going short the dollar and buying just about any other currency or commodity — finally reached China? Historical and current end-of-day data provided by Interactive Data Pricing and Reference Data . read more
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