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Bond Trading Platform 'Stops' Providing Trade By Foreigners Following Strong Outflows

CHINA
  • China’s main bond trading platform for foreign investors has 'quietly' stopped providing data on their transactions according to Bloomberg, following the strong outflows observed since the start of the year.
  • Foreign outflows of Chinese sovereign debts reached a record 51.8bn CNY in April based on Bloomberg calculations (see chart below) and may continue to remain elevated in the near to medium term as China 10Y bond yield premium (over US 10Y) has now completely vanished following the surge in US LT bond yields.
  • In addition, the strong CNY depreciation (partly driven by the MP divergence between US and China) could disincentive investors from holding Chinese assets (including bond).
  • China 10Y yield has found support at the 2.80% level in the past week, which corresponds to the 61.8% Fibo retracement of the 2.4610% - 3.3580% range, and the 100DMA. Resistance to watch on the topside stands at 2.8460% (200DMA), which was rejected last month.

Source: Bloomberg

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