1yr MLF Rate Steady, Higher Volumes Don't Boost Equities, Yields Down A Touch

As widely expected, the 1yr MLF rate was left unchanged at 2.50%. MLF volumes were larger though at 789bn yuan, versus 500bn of MLF expiring this month. Hence, we saw a net injection of 289bn yuan, the largest since December 2020 (per BBG).

• The market reaction has been relatively muted in the equity space. Mainland equities are tracking lower, while the HSI in HK is off around 0.50% at this stage. Tightened rules around short selling and securities lending hasn't impact sentiment much in a positive way at this stage (see this BBG link).
• Broader equity losses in Friday US/EU trade, which is weighing on sentiment throughout the Asia Pac region today, is no doubt a factor for HK/China markets.
• Onshore government bond yields are tracking a touch lower at this stage, the 10yr around 2.67%. Recent highs rest just above 2.73% in yield terms for the 10yr.
• In the FX space, USD/CNH is above 7.3100, but remains range bound. Most other Asia FX is tracking weaker against the USD.
• AUD and NZD are higher, but haven't moved much post the MLF injection news.
• In the commodity space, iron ore is steady near $114/ton, copper slightly higher. Brent crude is a touch below Friday closing levels, just under $91/bbl.