Eurodollar University The Largest Asset Class in the World Just COLLAPSED
Nov 2, 2025
China's new home sales plummeted by 42%, raising alarms for its banking sector and broader economy. Despite government stimuli, consumer demand remains stagnant, questioning the effectiveness of past interventions. The focus on tech over traditional industries poses immediate risks, with urgent calls for fiscal support in real estate. Declining bond yields reflect global economic concerns, as Chinese banks shift to safer investments amidst escalating stability fears. This housing crisis could have ripple effects on regional economies and currencies.
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China's Housing Collapse Signals Broader Problem
- New home sales in China plunged 42% year-over-year in October, signaling a collapse in the world's largest asset class.
- Jeff Snider argues this decline shows stimulus and central bank tools cannot revive demand in China's housing market.
Prolonged Deflation Forces Structural Change
- China has endured roughly ten consecutive quarters of falling GDP deflator, implying prolonged deflationary pressure.
- Snider says this deflation forces painful structural adjustments like cutting production and employment to rebalance prices.
Policy Masked Weak Demand, Now Labor Must Adjust
- Beijing prioritized employment over prices after reopening, propping labor demand by ordering firms to keep production high.
- Snider notes removing that policy exposes underlying weak market demand and pushes China onto the 'flat part' of the Beveridge curve.