MNI China Daily Summary: Thursday, December 12

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China O/N Repo Rate Jumps Ahead Of Holiday

ASIA RATES
  • INDIA: Yields mixed in early trade. Markets look ahead to today's GSAP operation, the final bond purchase in the current quarter. The RBI plans to buy INR 150b of 7.26% 2029, 6.1% 2031, and 6.64% 2035 bonds, and as part of its new twist arrangement will sell an equivalent amount of 8.15% 2022, 8.08% 2022, and 8.13% 2022 bonds. Traders will also await a decision if the nation's bonds will be included in the FTSE Russell's bond index, an announcement is expected this week. There is also some data on the docket today, fiscal deficit and current account figers will be released. Elsewhere there were reports yesterday that India aims to narrow its budget deficit to 6.3% of GDP this fiscal year, 0.5ppts lower than initially targeted, thanks to improving revenues.
  • SOUTH KOREA: Futures lower in South Korea; 3-Year contract down 7 ticks while the 10-Year down 39 ticks. Sentiment in the Asia-Pac region is mixed, but South Korean assets are seeing risk on trade. Finance Minister Hong spoke earlier and said that global inflation was a growing concern and that household debt needs to be curbed as it is a risk to the economy. Ahead of a meeting with BoK Governor Lee, Hong said he would discuss pre-emptive market stabilisation steps and would discuss financial imbalance issues. Data earlier showed industrial output fell 0.7% M/M against a rise of 0.3% expected the print means that industrial output, retail sales and investment declined in August, the first time since May that all the metrics declined together.
  • CHINA: The PBOC injected CNY 100bn via 14-day reverse repos on the final trading session before an extended break. China will observe a weeklong holiday starting tomorrow, with mainland markets returning on Friday Oct 8. The overnight repo rate jumped 85bps to 2.20%, matching the PBOC's prevailing 7-day rate, while the 7-day repo rate has fallen 28.25bps to 2.2634%. Futures are lower, the 10-year contract down around 14 ticks and touching session lows. As a reminder manufacturing PMI slipped into contraction for the first time since Feb 2020, while non-manufacturing unexpectedly rose into expansion, the Caixin manufacturing PMI print also rose.
  • INDONESIA: Yields higher, curve flattens. There has been little in the way of domestic catalysts today. Looking ahead, Indonesia's monthly CPI and Markit M'fing PMI will be published tomorrow.
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