US TSYS: Data Pushes Yields Higher Overnight, Market Looks to June for Next Cut

The CFETS Pledged Repo Deposit Institutions 7 Day Weighted Average declined throughout the week last week as the PBOC injected over CNY 550bn of liquidity via the daily OMO.  With sizeable maturities ahead this week, and market sentiment finely balanced, markets will watch closely for liquidity movements as a useful catalyst for the broader market outlook. 

• The PBOC issued CNY338.7bn of 7-day reverse repo at 1.4% during this morning's operations.
• Today's maturities CNY283bn.
• Net liquidity injection CNY55.7bn.
• The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
• The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.40%, from prior close of 1.44%.
• The China overnight interbank repo rate is at 1.30%, from the prior close of 1.30%.
• The China 7-day interbank repo rate is at 1.40%, from the prior close of 1.45%.

The USD/CNY fix moved lower, back to 7.0847, but this is above recent lows (7.0816). The fixing error was little changed at -289pips, versus -315pips on Friday. The fixing outcome shouldn't change broader USD/CNH trends, where the bias remains to fade upticks. Downside focus will rest on a renewed test under 7.1000, but we are little changed post today's fixing (last around 7.1075, up a touch on end Friday levels). Broader USD trends are a little firmer, with the BBDXY up close to 0.10%. 

• CHINA PBOC CONDUCTS CNY338.7 BLN VIA 7-DAY REVERSE REPO MON