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Is the Renminbi Behind Today's Sell-Off?

Stop the presses. China's industrial production craters. Or, that's what some headlines would have you believe. But, since when is 13.4% growth something to cower over? Sure, the rate of change isn't good. But, we're still talking double digits and that's nothing to sneeze about.
 
Inflation, however, remains the bigger worry. Tight monetary policy has done little to curb inflation in China, which came in at 5.3% - just shy of last months multi year high. Long-term wage trends are rising and commodities aren't giving China any help at curtailing costs - that's until this week.
 
So, the United States -and global markets- stalled today as the Dollar continued its one week long march higher. And, today's Treasury auction was a resounding success - surprising everyone. But, is it any wonder given China's trade balance is still creating significant impetus to support Treasuries? It's hard to imagine. After all, are they really going to bet big on the EU versus the U.S. at this point? 
 
But, if the Renminbi is going to gain additional support from further China tightening, why is the Dollar moving higher? Perhaps folks are anticipating a shift in the power struggle with stronger Chinese currency inevitably boosting U.S. goods? Or, perhaps folks are worried China's overheating is an out-of-control train of devastation?  It could be the Yuan remains too linked to the Dollar to ignore; suggesting any strengthening of China's currency has to correlate to a strong Dollar too.