CHINA: Country Wrap: Industrial Profit Declines Continue:

• RES 4: 118.030 High Jul 22 and a key resistance   
• RES 3: 117.698 50-day EMA 
• RES 2: 117.623 20-day EMA 
• RES 1: 117.350 High Jul 25      
• PRICE: 117.140 @ 06:19 BST Jul 25 
• SUP 1: 116.970 Low Jul 25  
• SUP 2: 116.840 Low Mar 18 (cont)
• SUP 3: 116.800 Low Mar 17 (cont) 
• SUP 4: 116.637 76.4% retracement of the Mar 6 - Apr 7 bull leg (cont)         

Bobl futures traded in a volatile manner last week and the contract pulled back from its Jul 22 high. The reversal cancels a recent bullish theme and attention turns to key short-term support at 117.200, the Jul 11 low and a bear trigger. The level has been breached, strengthening a bear theme and note too that the 117.000 handle has also been pierced. Sights are on 116.840, the Mar 18 low (cont). Initial firm resistance to watch is 117.623, the 20-day EMA.

• US and Chinese officials are meeting Monday to extend their tariff detente beyond a mid-August deadline, and haggle over other ways to further defuse trade tensions.  Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent will lead the delegations through Tuesday in Stockholm — their third meeting in less than three months. The agenda includes discussions about how long the current tariff truce can be extended, as well as US levies tied to fentanyl trafficking and Chinese purchases of sanctioned Russian and Iranian oil.   (source BBG)
• Over the weekend, the release of China's Industrial Profits for the year provided limited positive news for the current state for China's corporates.
• Industrial profits year-on-year declined -4.3% in June, following the decline of -9.1% in May.  The year-to-date number declined further to -1.8% YoY from -1.1% in May.  Intensive competition between companies has exacerbated deflationary pressures at a time when exports to the US remain pressurized. The auto sector particularly is seeing increased competition as EV manufacturers vie for sales. State-owned automakers Guangzhou Automobile Group and JAC Group have posted losses driven by the intense pricing pressure in the auto sector.  The data showed the gap widening between state owned enterprises and private companies. State-owned firms recorded a 7.6% decline in profits in the first half. Private-sector companies reported a rise of 1.7% while foreign firms logged a 2.5% increase.  China's authorities have stated this month that efforts to regulate aggressive price-cutting will be forthcoming, fueling expectations that a fresh round of industrial capacity cuts might be approaching.  (source MNI)
• In Hong Kong, markets are modestly higher, the HSI up around 0.4%, while the CSI 300 is down a touch in China. Over the weekend we saw profit results remain negative in y/y terms for June, albeit up from the May decline.
• Yuan Reference Rate at 7.1467 Per USD; Estimate 7.1686
• Bonds are firmer today with the CGB 10yr at +1.72%