China's 10 year bond futures is off.....>

CHINA RATES: China's 10 year bond futures is off its highs after having failed

to take out its 21-dma at 97.994, up just 3 ticks on the day. The 21-dma is

acting as resistance in cash yields, keeping the bearish trend intact. 

- The swap curve has edged down 1bps with the 10 year's failure to close above

3.0% on Monday giving way to weakness. 

- Ongoing easing measures by the PBOC have failed to trigger major declines in

Chinese rate expectations partly because inflation expectations appear to be

recovering amid the recent rise in equities. 

- The ongoing rally in the yuan is allowing the PBOC to continue easing both

fiscal and monetary policy for now, although the outcome of US-China trade talks

and the Fed meeting could determine how much longer the PBOC will be able to

ease without causing a reversal in recent yuan strength.