China's 10 year bond future has.........>

CHINA RATES: China's 10 year bond future has managed to hold a key support line

from the Sep lows despite some early weakness, with bulls now looking to recover

the 98 level to return the focus to the range highs at 98.465. However, swap

rates have seen some upside, with the curve 2-3bps higher amid some slight

steepening. 

- Some divergence is seen in 10 year swaps and bond yields, with the swap-yield

spread extending its recent outperformance to 8 month highs of 6bps. 

-At a Friday briefing on January monetary supply by officials from the PBOC,

policymakers noted there have been no changes to the orientation of prudent

policies. The PBOC also played down the ongoing fall in M1 growth noting that it

reflects structural factors rather than broader liquidity conditions. The PBOC

also noted it will promote the convergence of lending and deposit rates and

money market rates.

- The PBOC skipped open market operations for a sixth consecutive day Monday.

Liquidity remain unchanged, as no reverse repo matured today.