MNI China Daily Summary: Wednesday, July 3

MNI BRIEF:BOJ Q1 Output Gap Hits 16th Negative Reading In Row

MNI: PBOC Sets Yuan Parity Higher At 7.1312 Weds; -0.34% Y/Y

MNI: PBOC Net Drains CNY248 Bln Via OMO Weds; Rates Unchanged

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS WEDS

CHINA SETS YUAN CENTRAL PARITY AT 7.1312 WEDS VS 7.1291

PPI a Tenth Softer than Exp; Further NEIG HICP Disinflation to Come?

MNI: EUROZONE MAY PPI -0.2% M/M, -4.2% Y/Y

Services PMI points to wage bills increasing operating expenses

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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EGBs-GILTS CASH CLOSE: Bunds And Gilts Fade At End Of Strong Week

BONDS

Bunds and Gilts faded at the end of a strong week, with bear steepening in both curves as equities headed higher. Periphery spreads were flat/lower.

  • Little in the way of impactful news flow, EU leaders pushed forward with some vaccine rollout plans while still appearing to mull its options on export limits.
  • We saw a bit of a risk-on move in the afternoon on headlines that the UK and EU had reached a post-Brexit deal on financial services cooperation, but this was more of a framework than a firm deal. Also some headlines (but little reac) on Germany's top court temporarily delaying the country's participation in the pandemic recovery fund.
  • Next week's holiday-shortened schedule includes Eurozone CPI and final PMIs (Italy and Spain watched for their readings), otherwise few speakers (ECB's Lane and Villeroy) and limited supply.

Closing yields/10-Yr Spreads to Bunds:

  • Germany: The 2-Yr yield is up 0.1bps at -0.715%, 5-Yr is up 2.2bps at -0.676%, 10-Yr is up 3.8bps at -0.346%, and 30-Yr is up 4.1bps at 0.216%.
  • UK: The 2-Yr yield is up 1.5bps at 0.061%, 5-Yr is up 1.7bps at 0.332%, 10-Yr is up 2.8bps at 0.757%, and 30-Yr is up 4bps at 1.282%.
  • Italian BTP spread unchanged at 96.4bps/ Spanish spread down 1.3bps at 63.3bps
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