CNY: CNY : USD/CNY Fixing Lower than Market Estimates.
Dec-11 01:17
- CNY Reference Rate at 7.1843 Per USD; Estimate 7.2561.
- CNY reference rate was fixed 0.07% higher than the previous trading day, but lower than market estimates as per China Foreign Exchange Trade System (CFETS) website.
- CNY trading is allowed within 2% of the fixing, which is set daily by the central bank.
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CHINA: ‘Policy to Remain Accommodative’, According to PBOC Report.
Nov-11 00:56
- Last Friday saw the release of the quarterly monetary policy report from the PBOC.
- In it the PBOC pledged it will “resolutely insist on an accommodative monetary policy stance”.
- The report outlined the use of programs such as the ‘outright reverse repo agreements’ established in October where the PBOC can purchase eligible securities with an agreement to put back after one year
- The 1 year reverse repo is designed to support liquidity and keep interest rates manageable.
- The PBOC report reiterates comments made by the Governor Pan Gongsheng on the maintenance of loose policy to support the struggling economy.
The PBOC urged the countries banks to maintain ‘reasonable’ credit growth to support the broader economy.
ASIA: BONDS: NZ-US 10Y Differential Bounces Off YTD Low
Nov-11 00:31
NZGBs are 1-2bps richer following a mixed close in US tsys on Friday, with a twist flattening across the yield curves.
- US cash tsys are closed today for the Veterans Day holiday, while Treasury futures (TYZ4) are trading at 110-03+, down 0-05+ from Friday's close.
- The NZ–US yield spread remains steady at +25bps, about 15bps above last week's post-election low of ~+10bps—the narrowest level since mid-2021.
- A simple regression analysis with the 3-month swap rate 1-year forward (1Y3M) spread over the past year suggests that the 10-year yield differential is approximately 7bps wider than its fair value of +18bps.
- The regression error has ranged within +/- 20bps over the past year, indicating some variability in the relationship.
- The 1Y3M differential is a proxy for the expected relative policy path over the next 12 months.
Figure 1: NZ-US 10-Year Yield Differential
Source: MNI – Market News / Bloomberg
AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll
Nov-11 00:26
The latest Newspoll from The Australian is showing that the next federal election, which has to be held by 17 May 2025, is looking closer than it has since the last vote in 2022. It still seems a minority Labor government is the most likely outcome but if current trends continue that view becomes more uncertain. The two-party preferred measure is at 51% to 49% in favour of the opposition Coalition.
- The Coalition’s primary vote increased 2pp to 40% in the latest poll taken between November 4 and 8, the first time since the election and above its 35.7% recorded then. According to The Australian, a share at 40% or more makes it “competitive” at the next vote. One Nation appears to be losing support to the Coalition with it polling down 2pp to 5%, consistent with its result at the last election.
- Labor’s primary vote rose 2pp to 33% in the poll, in line with its share in the 2022 election. It seems to have made gains from the Greens and Others who both fell 1pp. The Greens are now down 1pp on its election outcome of 12.2%, while others & independents are 3.5pp lower.
- PM Albanese has been consistently seen as the better PM and while he still is, the gap with opposition leader Dutton has halved from 8pp in October to 4pp this month, narrowest since last election. Albanese was steady on 45% while Dutton rose 4pp to 41%.
- In terms of approval, Albanese’s net rating fell 1pp to -15, his worst since the election, while Dutton’s rose 3pp to -11 to be ahead. In general, respondents are not satisfied with either leader though.
