Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
Airline Loyalty Programs Face New Uncertainty as Visa–Mastercard Fee Settlement Evolves 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
EUR/USD Smashes 1.1660 as ADP Jobs Massacre Crushes the Dollar 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Bitcoin Smashes $93K as Institutions Pile In – $100K Next? 
Bitcoin Reserves Hit 5-Year Low as $2.15B Exits Exchanges – Bulls Quietly Loading the Spring Below $100K 
U.S. Productivity Growth Widens Lead Over Other Advanced Economies, Says Goldman Sachs 
Asia’s IPO Market Set for Strong Growth as China and India Drive Investor Diversification 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
2025 Market Outlook: Key January Events to Watch 
The front-end CNH risk-reversals have shrunk to near zero (see chart) as the PBoC's tight FX management has smashed realized volatility.
CNH vol skews started softening in mid-Q1 when Chinese authorities instituted capital controls to curb capital outflows and have been on a steadily declining trend since alongside a general risk premium compression in China-linked assets.
China risk-reversals in free fall front-end CNH risk-reversals compressed to almost zero this week (see above chart), a rare occurrence in the EM FX world and a dramatic change of fortunes for a currency that was supposed to be spiralling out of control and into a 1990s style crisis only a few months ago.
The move picked up pace this week with 1M 25D riskies falling to 0.05 vols (-0.30 from intra-week highs), effectively signalling symmetric volatility risks in both RMB rallies and sell-offs over the next month.
The optics of nearly flat risk reversals is jarring given the long history of disruptive EM currency weakness that usually commands a healthy premia for USD calls over USD puts, and the more recent macro-narrative of declining growth, unsustainable leverage and capital flight around China that ought to have been priced into options via fatter right tail probabilities (i.e. higher USD call/CNH put prices).
Unsurprisingly, anecdotal accounts indicated investor interest in snapping up zero price CNH riskies purely on price grounds, even if catalysts for a volatile sell-off over the next month are not obvious.
Stay short 6M vol; USD puts/CNH calls are better shorts than ATMs to monetize RMB stasis given the skew set-up.
