CHINA RATES: China Repo Rates Fall On Friday

The latest round of ACGB Nov-33 supply sees the weighted average yield print 0.8bp through prevailing mids (per Yieldbroker), extending the recent trend of firm pricing at ACGB auctions.

• The cover ratio of 4.1286x falls slightly short of the previous auction's 4.7071x, yet still remains above the 4.0x mark.
• The anticipation of sustained robust pricing at today's auction, as outlined in the auction preview, materialised as expected. The higher outright yield, a steeper curve, a less hawkish RBA and the line’s inclusion in the XM basket all seemingly contributed to bolstering demand in today's auction.
• Curiously, despite the recent shift in sentiment towards longer-dated global bonds, today's auction demonstrated robust bidding strength, suggesting that this shift did not significantly restrain overall demand.
• Post-supply, there has been negligible movement observed in XM futures, while the bond itself has experienced a marginal cheapening in comparison to its pre-auction levels.

The USD/CNY fix printed at 7.1988, versus a Bloomberg consensus of 7.2943.

• Today's outcome is an -955pip surprise in USD/CNY terms. This compares with yesterday's -1111pip outcome, which was a fresh record wide. Today's fix is very close to yesterday's 7.1992 and we remain sub 7.2000 for the fixing outcome for the third straight session.
• USD/CNH has traded with a softer tone in early dealings today, as USD sentiment has weakened against the majors. The pair was last under 7.3000 (tracking near 7.2990). Earlier highs were at 7.3075.

The BoJ offers to buy a total of Y1.075tn of JGBs from the market:

• Y425bn worth of JGBs with 1-3 Years until maturity
• Y450bn worth of JGBs with 3-5 Years until maturity
• Y200bn worth of JGBs with 10-25 Years until maturity