Chinese Politburo Headlines Apply Some Pressure to USD & Provide Light Bid For Equities

Market moves have been fairly contained, albeit risk-positive, when it comes to reacting to the initial flurry of headlines surrounding the heavily anticipated Chinese Politburo meeting, which saw stronger language adopted re: well-defined areas of concern.

• The Politburo noted that it will enact a plan to resolve local government debt risks alongside strengthening counter-cyclical adjustments, as well as increasing support for the property market and actively boost domestic demand. Elsewhere, it once again vowed to keep the exchange rate “basically stable,” while stressing the need to boost investor confidence and outlining a desire for policy support to be forceful, but targeted. This comes after a warning that the economic recovery will be “torturous.”
• USD moves away from best levels of the day as a result, while e-mini futures nudge higher, oil firms and bids in core global FI markets are capped as bond futures move away from best levels of the day. USD/CNH was printing above CNH7.2100 ahead of the headlines but has since shown below CNH7.2000 before recovering the figure.
• While the more forceful tone re: well-defined areas of worry will be welcomed by markets, a lack of concrete details is probably limiting any follow through, at least for now.
• There was a well-documented hope for the formal unveiling of meaningful support at this event (which had moderated from extremes in recent sessions), with the initial indication being that the Politburo has provided enough information to avoid underdelivery.