Evergrande teeters on edge of default as $148M payment falls due
> Shares of developer Fantasia Holdings (1777.HK) plunged 50% on Wednesday after it said there was no guarantee it would be able to meet its other financial obligations following a missed payment of $205.7 million due on Oct. 4.<p>Watch the US bond market closely. Today saw a sharp selloff on the 10-year maturity, a favorite "asset" of foreign governments and companies. When those organizations get into trouble, they sell treasuries to raise cash. "Trouble" often comes in the form of dollar-denominated debt which must be serviced in dollars.<p>As the dollar rises, borrowers of dollar-denominated debt must raise <i>more</i> local currency to buy the dollars to service their loans. That puts further upward pressure on the dollar, distressing foreign usd-debtholders even more. It's called a "short squeeze":<p><a href="https://www.lynalden.com/global-dollar-short-squeeze/" rel="nofollow">https://www.lynalden.com/global-dollar-short-squeeze/</a><p>The entire world (including the US federal government) has taken a short position on the US dollar by assuming obligations requiring them to pay later in dollars. Ask any Ape on WallStreetBets what happens to shorts during a short squeeze, and you'll get the same answer: they get rekt.<p>The dollar spiked past a key technical level today.<p><a href="https://www.tradingview.com/chart/?symbol=DXY" rel="nofollow">https://www.tradingview.com/chart/?symbol=DXY</a><p>In 2020, a similar dynamic took hold, with stocks, bonds, and gold falling in price as the dollar surged. We may not be there yet, but the scramble for dollars in China (and possibly all of Asia) is just starting.