CHINA RATES: China Bonds Cheapen Ahead Of CPI & PPI Data Tomorrow, Fitch: Debt Outlook To Negative
Chinese Government Bonds are dealing 2-4bps cheaper across benchmarks, but little changed after Fitch revised its outlook on the nation’s sovereign debt to negative (See BBG link).
- (Bloomberg) China’s debt problem and property crisis are well known and understood by market participants, so there should be little market impact from Fitch’s outlook cut, said Michelle Lam, economist at Societe Generale.
- Notwithstanding today’s cheapening, the extent of the recent local bond market rally remains in focus given recent comments from the PBoC around monitoring long-term interest rates amid the rebound in growth. The next litmus test for local bonds will come tomorrow with the CPI and PPI due for March.
- (Bloomberg) The recent chatter about Beijing adopting quantitative easing is misplaced. Such a move is at odds with President Xi Jinping’s goal to build a financial system that is “fundamentally different” from the West. Instead, Beijing may be concerned that a deluge of bond supply may destabilize the nation’s debt market, which is showing signs of overheating. (See link)
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SCHATZ TECHS: (M4) Bullish Short-Term Outlook
- RES 4: 106.315 High Feb 8
- RES 3: 106.145 High Feb 15
- RES 2: 106.040 Low Feb 15
- RES 1: 106.010 High Mar 8
- PRICE: 105.945 @ 05:49 GMT Mar 11
- SUP 1: 105.705 Low Mar 7
- SUP 2: 105.640 Low Mar 5
- SUP 3: 105.575 Low Mar 1
- SUP 4: 105.490 Low Feb 29 and the bear trigger
The downtrend in Schatz futures remains intact, however, for now a corrective cycle remains in play. Resistance at 105.850, the Feb 26 high, has been cleared and this signals scope for a climb towards 106.145, the Feb 15 high. For bears, recent fresh cycle lows reinforce bearish conditions and maintain the price sequence of lower lows and lower highs. The bear trigger has been defined at 105.490, the Feb 29 low.
STIR: SFRZ4/H5 Steepener Flow
Recent flow in SFRZ4/H5 sees paper pay -31.0 on 11.5K.
GBPUSD TECHS: Bullish Breakout
- RES 4: 1.3045 High Jul 19 2023
- RES 3: 1.2996 High Jul 27 2023
- RES 2: 1.2946 2.00 projection of the Feb 14 - 22 - Mar 1 price swing
- RES 1: 1.2894 High Mar 8
- PRICE: 1.2850 @ 05:59 GMT Mar 11
- SUP 1: 1.2786 High Dec 1
- SUP 2: 1.2694/00 20-day EMA / Low Mar 1
- SUP 3: 1.2519 Low Feb 5 and the bear trigger
- SUP 4: 1.2500 Low Dec 13
A bullish phase in GBPUSD last week has strengthened the current recovery. Friday’s climb resulted in a break of the bull trigger at 1.2827, the Dec 28 high. This represents an important technical break and confirms a resumption of the bull trend that started on Oct 4 last year. The move higher signals scope for 1.2996 next, the Jul 27 2023 high. Initial firm support is seen at 1.2694, the 20-day EMA.
