China 10 year bond future is off 22.....>

CHINA RATES: China 10 year bond future is off 22 ticks as it drops below the Jan

15 low to trigger a double top formation. Uptrend support from the Sep 20 low

comes in just below current levels and a break below here would suggest a

bearish trend change. Cash yields are up 1.3bps on the day. 

- Swaps are a few basis points higher across the curve which has seen some

slight steepening as the 10 year edges back above 3.0%.

- As we argued in Friday's CHINA MONEY WEEK 'Reflation Trade Resuming?', the

surge in stocks is likely to weigh on bond prices as inflation expectations

rebound. The PBOC's announcement late last week that it will allow China's

primary dealers to swap their holdings of perpetual bonds for central bank

bills, and directly use those bonds as collateral to access certain PBOC

liquidity operations, is yet another easing step, and the failure of yields to

head lower since then is a sign that risk on sentiment is dominating the space.