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China Repo Rates Invert

  • INDIA: Yields higher after a brief initial move lower. Friday's auctions were poorly received, the RBI didn't accept any bids for the 6.10% 2031 and sold only INR 150bn against an original target of INR 260bn. Yields were higher on the day after the RBI rate announcement where the MPC kept rates on hold, but the vote saw unexpected hawkish dissent. 10-Year yield rose to 6.24% on Friday, the highest since March. Short-dated bonds could come under pressure today as markets digest the RBI's announcement of an expanded VRRR plan to drain liquidity. There are no releases on the economic docket today markets await industrial production and CPI data later in the week.
  • SOUTH KOREA: Futures sold off at the open in South Korea, playing catch up with moves in US tsys after a strong US NFP print. On the coronavirus front South Korea reported 1,492 daily new coronavirus cases, back to below 1,500 on fewer tests over the weekend as the country has extended its highest virus rules for another two weeks due to relentless spread of the virus. Elsewhere KDI, a state run think tank, said that the South Korean economy is facing heightened uncertainty as the recovery of domestic demand is likely to slow amid a recent spike in COVID-19 cases.
  • CHINA: The PBOC matched liquidity maturities with injections today; repo rates are higher with the overnight and the 7-day rate inverting. The overnight rate is up 33bps at 2.2389%, the 7-day repo rate is up 2.3bps at 2.1733%. Futures lower from the open and hanging around session lows, the worst levels since July 30, in the cash space 10-year yields are up 4.5bps while equity markets have pushed higher. Data earlier showed CPI rose 1.0%, faster than the 0.8% expected but slower than the 1.1% in June, PPI rose 9.0% against estimates of 8.8% and 8.8% last time out.
  • INDONESIA: Yields higher amid uncertainty over government's handling of the pandemic. Authorities are expected to update the current restrictions amid a decline in Java's caseload and the coronavirus' spread into outer regions. On Saturday, the Cabinet released a video from their latest meeting, where it emerged that areas outside Java and Bali now account for more than half of new infections. President Widodo called for fresh mobility curbs for at least two weeks.

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