... not a "Lehman moment", but that any contagion would be limited at best; at the same time central bankers - not just in China but around the globe - were quick to assure investors that a collapse by China Evergrande Group wouldn't lead to a crash. As usual, Wall Street consensus (especially when coupled with soothing lies from central planners bankers) was dead wrong because now that the bond selloff has spread to China's entire real estate sector and beyond, including healthy government-backstopped investment grade companies, concern is growing about the potential risk to the global financial system.

On Monday, the Federal Reserve made that link explicit in its semi-annual report on financial stability, warning that what happens in China's property industry could impact financial markets and threaten world economic growth. Underscoring the risks of a potential spillover, the Hong Kong Monetary Authority asked banks to disclose their exposure to Chinese real estate, according to a local media report.

As Bloomberg reported, at the heart of the bond market rout is concern that developers may have far more debt than disclosed on their balance sheets. That emerged after companies suddenly struggling to pay public and hidden debt despite representing that they have sufficient capital. Making matters worse is developers' inability to roll over maturing debt due to surging borrowing costs that effectively shut them out of the dollar bond market. China's 10 largest developers by sales owe a combined $1.65 trillion in liabilities.