CHINA PRESS: China Should Quicken Pension Reform
China should increase the transfer of state-owned capital towards pension funds, given the expected negative worker to pensioner ratio from 2035, said Guo Shuqing, former chairman of the China Banking and Insurance Regulatory Commission, adding pension funds could enter a financial deficit by around 2045. The government needs to improve the surplus funds’ return on investment by significantly raising the proportion of professional entrusted investors and reasonably relaxing restrictions on investing scope, said Guo. (Source: International Financial News)
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STIR: RBA Dated OIS Pricing Mixed Relative To Pre-RBA Levels
RBA-dated OIS pricing is steady to 6bps softer across meetings today, with late 2025 and early 2026 leading the decline.
- As a result, pricing is now mixed compared to last Tuesday’s pre-RBA levels—meetings through September are flat to 3bps firmer, while those beyond are 2-4bps softer.
- This shift comes despite RBA Governor Bullock cautioning that market expectations for further rate cuts are not assured.
- Markets assign a 13% probability to a 25bp rate cut in April, with a cumulative 53bps of easing priced by year-end, based on an effective cash rate of 4.09%.
Figure 1: RBA-Dated OIS – Today Vs. Pre-RBA Levels
Source: MNI – Market News / Bloomberg
AUSSIE BONDS: Richer & At Session Bests Despite Post-Cut Rebound In Cons Conf
ACGBs (YM +4.0 & XM +3.5) are stronger and at Sydney session highs.
- Today, the local calendar is light, ahead of January's CPI Monthly tomorrow.
- Australian consumer confidence strengthened last week to mark its highest level since May 2022 as households cheered the RBA's first rate cut since the pandemic, according to ANZ and Roy Morgan Research.
- Cash US tsys are ~2bps richer in today’s Asia-Pac session after yesterday’s gains.
- Cash ACGBs are 4bps richer with the AU-US 10-year yield differential at +2bps.
- Swap rates are 3-4bps lower.
- The bills strip has bull-flattened, with pricing +1 to +5.
- The AOFM plans to sell A$800mn of the 3.75% 21 April 2037 bond tomorrow and A$700mn of the 1.75% 21 November 2032 bond on Friday.
CHINA: Central Bank Drains Liquidity via OMO.
- The PBOC issued CNY318.5bn of 7-day reverse repo.
- Today’s maturities CNY489.2bn
- Net liquidity withdrawal CNY170.7bn.
- The PBOC monitors and controls liquidity via the issuance daily of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted Average Index declined to 1.81% from yesterday’s close of 2.05%
- China’s Overnight interbank repo rate is at 1.8824% (from yesterday’s close of 1.7%)
- China’s 7-day interbank repo rate is at 2.30% from yesterday's close of 2.07%
