CHINA: PBOC Provides Update on Foreign Ownership of Bonds
Jul-23 04:06
- The PBOC issued a release showing that foreign institutions held CNY4.3 trillion of bonds via the interbank market.
- This accounts for 2.5% of total 'custody volume' of bonds.
- Overseas institutions hold CNY2.1tn of CGBs, CDs CNY1.15tn, Policy Bonds CNY810bn.
- There are over 1,170 of overseas institutions who have access to the interbank market with just over 70% via Bond Connect in Hong Kong.
- The release comes days after a China Daily article suggesting that China will over time move away from investing US Treasuries.
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US TSYS: Asia Wrap - Yields Edge Higher Led by the Long-End
Jun-23 04:00
The TYU5 range has been 110-25+ to 111.04 during the Asia-Pacific session. It last changed hands at 110-27+, down 0-04 from the previous close.
- The US 2-year yield has edged higher trading around 3.916%, up 0.01 from its close.
- The US 10-year yield has bounced higher trading around 4.392%, up 0.02 from its close.
- (Bloomberg) -- “Treasuries may benefit from demand for haven assets and concerns over an economic slowdown unless oil prices rise dramatically, according to Nomura Securities Co.”
- Lance Roberts on X: “While the Fed is quietly sitting on the hands as economic data slows and tariff inflation remains non-existent, other central banks are rapidly cutting rates with the Swiss restarting NIRP. The Fed is likely going to be too late once again adjusting monetary policy which is its history.”
- The 10-year yield continues to find decent supply back towards its 4.30/35% support, this area needs to hold if yields are to move higher. The range looks to be 4.30% - 4.60% for now a break either side would provide a clearer direction.
- Data/Events: S&P Global US PMI’s, Existing Home Sales
CHINA: Bond Futures Move Lower
Jun-23 03:17
- China's bond futures have all moved lower in morning trade as major equity bourses are mixed.
- The 10YR future is down -0.05 at 109.10, remaining above all major moving averages. The nearest is the 20-day EMA of 108.98
- The 2YR future is down -0.02 at 102.52 and sits between the 100-day EMA of 102.61 and the 50-day EMA of 102.50
- Having closed Friday at 1.64% the 10YR CGB is at 1.63% this morning, lower by -0.5bp
AUSSIE BONDS: Weaker After Early Strength Reversed
Jun-23 02:34
ACGBs (YM -1.0, XM -4.0) have weakened, reversing early modest gains following reports of US airstrikes on Iranian nuclear sites over the weekend.
- Outside of the previously outlined S&P Global PMIs (P), there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are 1-2bps cheaper in today's Asia-Pac session.
- (Bloomberg) Australia’s 30+ day conforming mortgage arrears rose by 23bps q/q to 1.36% in 1Q, while non-conforming arrears rose more sharply by 39bps to 5.32%, Fitch Ratings says in a statement.
- Cash ACGBs are flat to 4bps cheaper with the AU-US 10-year yield differential -17bps.
- The bills strip has cheapened slightly, with pricing flat to -2.
- Today’s Nov-32 auction reflected solid pricing for ACGBs, with the weighted average yield coming in 0.74bps below prevailing mid-yields, according to Yieldbroker. Moreover, the cover ratio nudged higher to 3.3550x from 3.2100x in the previous auction.
- RBA-dated OIS pricing is modestly softer across meetings today. A 25bp rate cut in July is given an 84% probability, with a cumulative 74bps of easing priced by year-end.
