CHINA: Central Bank Withdraws CNY

The latest ACGB Mar-36 auction saw strong demand, with the weighted average yield coming in 0.21bps through prevailing mid-yields, according to Yieldbroker, continuing the trend of firm pricing at recent ACGB auctions.

• However, the cover ratio collapsed to 3.3111x from 4.45x.
• As highlighted in our preview, bidding at today’s auction faced an outright yield that was 20bps lower than the previous auction level and about 30bps below the late February peak.
• The 3/10 yield curve was around 30bps flatter than its recent high.
• The recent improvement in global sentiment toward bonds didn’t appear to assist today’s bid dramatically.
• There has been no material movement in XM or the cash line in post-auction trading.

The USD/CNH fix printed at 7.1409, versus a Bloomberg market consensus of 7.1830

• The fix dropped sharply, given softer USD, while the fixing error also widened to - 421 pips, from -317pips yesterday.  
• USD/CNH is through 7.1932 in morning trading after opening at 7.1890.

• CHINA SETS YUAN CENTRAL PARITY AT 7.1409 WEDS VS 7.1366