Australian dollar (AUD) is falling towards its 2008 and 2020 lows as China's bond contagion is probably already occurring. China bailing out massively indebted property companies will not solve their rising unemployment rate and debt crisis. All eyes on Australian bonds and AUD.

China's bond contagion could be already beginning to impact everything and everybody.  Despite Chinese authorities shutting down financial reporting on how bad their economy is, while uptalking that any contagion has been contained (We have heard this before right?), the gist of the matter is that bonds connected to behemoth Chinese development companies are most likely on the balance sheets of a many investment banks and/or Western government holdings.  Since China seems incapable of breaking up these companies, if they just bail them out again, like 2022, it may not do the trick this time.  That and Chinese unemployment is beginning to spike upward, will further add pressure to an economy slowing down dramatically.

Eyes on the Australian bond and FX market/s.  More so the 10 YR yield and the AUD/USD spread.   Which as Chart 1 shows, the AUD is now sliding towards 0.64 and possible lows of 0.61, mirroring the 2008 Financial Crisis and the COVID Pandemic of 2020.  Please refer to the vertical blue lines, and the horizontal red line/s.

Aust 10YR Bond yields are at 10 year highs, due partially to Australian interest rates at 4.1%, refer to separate pane, but also Aust bonds will be unloved if China does indeed fall into a deep recession or stagnated economy.  This also can be seen with the declining Australian currency.