AUSSIE BONDS: Dec-30 Supply Absorbed With Less Demand

• The PBOC issued CNY157bn of 7-day reverse repo at 1.4% during this morning’s operations.
• Today’s maturities CNY92bn
• Net liquidity injected CNY65 bn.
• 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 1.42%, from yesterday’s close of 1.58%.
• The China overnight interbank repo rate is at 1.52%, from the prior close of 1.40%.
• The China 7-day interbank repo rate is at 1.42%, from the prior close of 1.59%.  Today's repo rate of 1.42% is a 1-year low

Expectations of sustained strong pricing at auctions proved accurate, with the latest round of ACGB Dec-35 supply seeing the weighted average yield print 0.55bp through prevailing mids (per Yieldbroker).

• However, today’s cover ratio fell to 3.1042x from 3.5312x in the previous auction despite a steeper 3/10 curve.
• As noted in our auction preview, demand for duration faced headwinds from weaker sentiment toward longer-dated global bonds.
• Post-auction, the ACGB December 2035 cash line and the XM futures contract both traded slightly cheaper.

The USD/CNY fix printed at 7.1937, versus a BBG market consensus of 7.2181.

• This is little changed on yesterday's outcome (7.1931), while the fixing error widened slightly to -244pips, from -176pips yesterday.
• USD/CNH is a little changed in early dealings, last near 7.2160. CNH is lagging continued USD softness. Earlier headlines crossed from the MOFCOM stating that the US is abusing export controls in the chip sector and that China will protect its interest in the space.