Chinese 10-Year yields closed below.....>

CHINA RATES: Chinese 10-Year yields closed below 2.80% yesterday, in territory

we hadn't seen since the latter part of 2016. The metric has rebounded above the

watermark on the back of the broader risk-on feel to early regional trading on

Tuesday, supported by a rally in the major regional equity indices, as local

participants pay more attention to the positives in the latest daily Coronavirus

counts.

- Yields remained capped by questions over the health of the local economy,

which has been magnified by the onset of the Coronavirus, in turn triggering

calls for deeper easing from the PBoC (with rates applied to OMOs already cut in

recent times), and an increase in liquidity provisions/lending to businesses

particularly hampered by the virus. Some PBOC advisors have tipped their hat

towards the potential for MLF & LPR rate cuts as soon as this month, while at

least one other has pointed to the need to mull a cut in benchmark deposit

rates.