MNI: PBOC Net Drains CNY408.7 Bln Via OMO Tues

MNI: PBOC Sets Yuan Parity Lower At 7.1334 Tues; -1.30% Y/Y

CHINA PBOC CONDUCTS CNY267.3 BILLION VIA 7-DAY REVERSE REPOS TUES

CHINA SETS YUAN CENTRAL PARITY AT 7.1334 TUES VS 7.1335

MNI PBOC WATCH: PBOC Cuts 7-Day Rate As Reconfigures Framework

MNI China Daily Summary: Monday, July 22

EZ/UK T-Bill Calendar: 3/6-Month RATB Auction on Tuesday

EZ/UK Bond Supply Calendar: UK, Germany Auction on Tuesday

Philippine's FinSec Open To Rate Cuts, Front-End Yields Lower

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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Can-US 2Y Yield Differential Tightest Since Late October

CANADA
  • GoCs trade ~1.5bp richer on the day to underperform Treasuries (2.5-3.5bp richer) ahead of CAD GDP/US PCE & durable goods at the bottom of the hour.
  • The Can-US 2Y yield differential of -38.5bps has narrowed further after yesterday’s larger adjustment and is at its highest since late October before signs of softer growth and faster labour market moderation.
  • Excerpts from the BoC’s market consultation released late yesterday: "A universal response from participants was the current mismatch between very strong demand for 30Y bonds and limited supply [ …] Many respondents noted that even small trades in 30Y bonds can move markets somewhat and trying to trade larger positions can be challenging. Market participants therefore requested Canada to consider increasing the amount of 30Y bond issuance."
  • “Several market participants raised the topic of RRBs. Beyond comments around the lack of advance warning ahead of last year’s cancellation of the program, participants noted that there is strong demand for RRBs given it is the key asset available for hedging Canada-specific inflation risk and serves as an important curve to value Canadian pension liabilities. Many investors, including pension plans, have had to turn to imperfect inflation hedging assets such as US TIPS and are therefore becoming more exposed to a change in correlation between US and Canadian CPI. While acknowledging that a resuscitated RRB program is very unlikely, many participants expressed that it would be welcome.”
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