CHINA: Country Wrap: Plans Afoot to Subsidize Consumer Loans
- China plans to subsidize interest payments on eligible personal consumer loans from Sept. 2025 to Aug. 2026, according to a statement from the Ministry of Finance. Subsidy applies to loans under 50,000 yuan for consumption, and designated big-ticket items over 50,000 yuan — including autos, education, and healthcare. China’s consumer loan interest subsidy program is expected to support a recovery in lending, especially for operating loans in the consumer services sector, while benefiting major banks and enhancing their market share, according to analysts from brokerages including China Merchants Securities. (source BBG)
- resident Xi Jinping and Brazilian President Luiz Inacio Lula da Silva have expressed their opposition to unilateralism and protectionism, and pledged to promote the greater development of bilateral ties. In a phone conversation between the two heads of state on Tuesday, Xi told Lula that China is ready to work with Brazil to set an example of unity and self-reliance among major countries of the Global South, and to jointly build a more just world and a more sustainable planet. (source China Daily)
- China and Hong Kong markets are also higher. The CSI 300 last around +0.90%. The HSI is up around +1.90%, with the tech sub index +2.35%.
- Yuan Reference Rate at 7.1350 Per USD; Estimate 7.1768
- Ten year government bond yields are modestly lower with the 10-year at 1.72%
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EURUSD TECHS: Corrective Cycle Still In Play
- RES 4: 1.1982 2.0% 10-dma envelope
- RES 3: 1.1923 2.000 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1851 High Sep 10 2021
- RES 1: 1.1765/1829 High Jul 08 / 01 and the bull trigger
- PRICE: 1.1677 @ 07:16 BST Jul 14
- SUP 1: 1.1660/51 20-day EMA / Intraday low
- SUP 2: 1.1575 Low Jul 24
- SUP 3: 1.1495-day EMA
- SUP 4: 1.1446 Low Jun 19
A corrective cycle in EURUSD remains intact. The primary trend condition remains bullish with moving average studies continuing to highlight a dominant uptrend. Support to watch is 1.1660, the 20-day EMA. It has been pierced, a clear break of it would signal scope for a deeper retracement, potentially towards the 50-day EMA at 1.1495. For bulls, a resumption of gains would signal scope for a climb to 1.1851, the Sep 10 2021 high.
JGBS: Bear-Steepening As Upper House Elections Approach
JGB futures are sharply weaker and hovering near session lows, -46 compared to settlement levels.
- (Bloomberg) " The Bank of Japan finished selling millions of dollars of stocks it bought from besieged banks, ending a nearly two decade process. The BOJ's holdings of the shares purchased from banks hit zero as of July 10, falling from 2.5 billion 10 days ago, according to its balance sheet report."
- "JAPAN RULING BLOC MAY LOSE MAJORITY IN ELECTION: JNN ANALYSIS" – BBG
- Cash US tsys are slightly cheaper, with a steepening bias, in today's Asia-Pac session after Friday's bear-steepener.
- Cash JGBs are flat to 4bps cheaper across benchmarks, with the 20-year leading. The benchmark 10-year yield is 6.4bps higher at 2.578% versus the cycle high of 2.605%.
- Swap rates are flat to 6bps higher, with a steeper curve. Swap spreads are tighter out to the 20-year and wider beyond.
- Tomorrow, the local calendar will be empty apart from 5-year Climate Transition supply.
BUND TECHS: (U5) Bear Cycle Remains Intact
- RES 4: 131.95 High Jun 13 and the bull trigger
- RES 3: 131.33 High Jun 20
- RES 2: 130.76 High Jul 4
- RES 1: 130.10/130.56 High Jul 8 / 50-day EMA
- PRICE: 129.26 @ 05:50 BST Jul 14
- SUP 1: 129.12 Low Jul 11
- SUP 2: 128.97 Low May 14 and a reversal trigger
- SUP 3: 128.90 Low Apr 10
- SUP 4: 128.40 Low Apr 9
Bund futures traded lower last week, and a bear cycle remains intact. Friday’s extension resulted in a break of 129.30, the May 22 low. The breach strengthens the current bearish theme and exposes the next key support at 128.97, the May 14 low and a bear trigger. On the upside, resistance around the the 50-day EMA, at 130.36, marks the key short-term hurdle. A clear breach of it is required to highlight a possible reversal.
