STIR: RBA Dated OIS - Year-End Easing Expectations Return

Authorities issuing additional local government special refinancing bonds for resolving hidden debts in H2 cannot be ruled out, given the 14% y/y decline in land revenue from January to May, according to Wang Qing, chief macro analyst at Golden Credit Rating. Wang noted that broad fiscal expenditure, which combines general public and government fund budget expenditure, fell by 2.2% year-on-year during January to May, which was not conducive to the counter-cyclical role of current fiscal policy. (Source: 21st Century Business Herald)

The People’s Bank of China may start selling treasury bonds after deciding to borrow from selected primary dealers, in a bid to increase bond supply and curb falling yields of medium- and long-term bonds, Shanghai Securities News reported citing analysts. The central bank has repeatedly warned of maturity mismatch and interest rate risk from holding large amounts of longer-term bonds, the newspaper said. The PBOC’s holdings of government bonds are mostly three years or less, and treasury borrowing operations may pave the way for bond sales, said Zhou Guannan, chief fixed income analyst of Huachuang Securities.