Bid After Two-Way Asia Trade Ultimately Dominated By Soft Chinese Economic Data

Chinese matters were front and centre for broader risk appetite during Asia-Pac dealing, with TYM2 last +0-08+ at 119-14, 0-04 off the peak of its 0-16+ range, on relatively limited volume, given the price swings, of ~115K, with activity a little limited by the observance of the Vesak Day holiday in several Asia-Pac countries (most notably Singapore), Meanwhile, the cash Tsy curve has flattened, with the major benchmarks running 0.5-2.0bp richer on the day, led by 10s.

• The early, positive mood music that surrounded weekend news which revealed the latest move on the part of Chinese authorities re: stimulating the property market (although analysts have questioned the efficacy of a lower mortgage rate floor for first time buyers), coupled with confirmation that Shanghai will start to gradually re-open from today, quickly vanished on the back of softer than expected Chinese economic activity data, which magnified any disappointment surrounding PBoC inaction in its latest round of MLF operations (net neutral in liquidity terms and no change in the interest rate applied to use the facility).
• Note that the aforementioned weekend news flow had allowed wider markets to look through Goldman Sachs downgrading its U.S. economic growth projections and year-end target for the S&P 500 during early Asia dealing.
• Empire manufacturing data and Fedspeak from NY Fed President Williams headline the NY docket on Monday.