Additional Sovereign Bond Issuance In Line With Exp., Fiscal Deficit Proj. Marked Higher

Fiscal headlines continue to trickle out of China, with wires noting that the additional CNY1tn of sovereign bond issuance that has been approved will push this year’s fiscal deficit to ~3.8% of GDP.

• These developments are in line with yardsticks outlined in a BBG sources piece published a couple of weeks back.
• As a reminder, BBG sources flagged that “policymakers are weighing the issuance of at least 1 trillion yuan of additional sovereign debt for spending on infrastructure such as water conservancy projects. That could raise this year’s budget deficit to well above the 3% cap set in March.”
• Although global benchmark equity index futures nudged higher on the initial headlines, and USD/CNH ticked lower, the as expected nature of the details meant that those moves were limited and generally reversed.