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CHINA:  Bond Futures Not Reacting to Headlines. 

CHINA
EM BulletAPACChinaEmerging Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets
  • Ahead of the NPC headlines are emerging as to potential policy amendments to support the Chinese economy.
  • Policies that potentially impact the bond market include a 5% growth target, a lower CPI target, a 4.4% rise in fiscal spending and the issuance of CNY1.3tn of ultra long term treasury bonds, up from CNY1 trn in 2023 and an increase in the 2025 quota on local government special bonds to CNY4.4tn, from CNY3.9tn.
  • Surprisingly the market has not reacted to the increased supply risk and has seen bond future rally today.
  • China’s 10YR bond future is up by +.10 to 108.445, from yesterday’s close of 108.345.
  • Having trended away from the converging 20-day EMA of 108.53 and 50-day EMA of 108.50, today’s rally sees the 10YR approaching these levels.
  • China’s 2YR future remains unchanged at 102.61, below the 200-day EMA of 102.63.
  • Despite the proposed longer dated issuance to come, cash bonds have hardly moved with the CGB10YR at 1.75% and the 30YR unchanged at 1.89%
  • The major economic release for today was the Caixin PMI services which was up at +51.4 and on the 7th sees the trade data for February
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  • Ahead of the NPC headlines are emerging as to potential policy amendments to support the Chinese economy.
  • Policies that potentially impact the bond market include a 5% growth target, a lower CPI target, a 4.4% rise in fiscal spending and the issuance of CNY1.3tn of ultra long term treasury bonds, up from CNY1 trn in 2023 and an increase in the 2025 quota on local government special bonds to CNY4.4tn, from CNY3.9tn.
  • Surprisingly the market has not reacted to the increased supply risk and has seen bond future rally today.
  • China’s 10YR bond future is up by +.10 to 108.445, from yesterday’s close of 108.345.
  • Having trended away from the converging 20-day EMA of 108.53 and 50-day EMA of 108.50, today’s rally sees the 10YR approaching these levels.
  • China’s 2YR future remains unchanged at 102.61, below the 200-day EMA of 102.63.
  • Despite the proposed longer dated issuance to come, cash bonds have hardly moved with the CGB10YR at 1.75% and the 30YR unchanged at 1.89%
  • The major economic release for today was the Caixin PMI services which was up at +51.4 and on the 7th sees the trade data for February