MNI China Daily Summary: Tuesday, Aug 20

RIKSBANK CUTS POLICY RATE BY 25BP TO 3.5%

China Repo Rates Rise On Tuesday

MNI: PBOC Net Drains CNY236.6 Bln via OMO Tuesday

MNI: PBOC Sets Yuan Parity Lower At 7.1325 Tues; +2.12% Y/Y

MNI: EUROZONE JUN CONSTRUCTION OUTPUT +1.7% M/M, +1% Y/Y

Final Data Broadly Confirms Flash HICP Details

MNI: EUROZONE JUL FINAL HICP +0% M/M, +2.6% Y/Y

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

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EGBs-GILTS CASH CLOSE: UK Short-End Shows Pre-BoE Jitters

BONDS

Bund and Gilt yields retraced their intraday highs to close fairly flat by the close, with some modest bear steepening in both curves.

  • Ahead of next week's BoE meeting (a 25bp hike is nearly fully priced), UK short-end yields hit fresh 11-year highs (2Y > 1.00%) before pulling back.
  • Eurozone GDP data was mixed (German miss stood out). Attention also turns to the ECB meeting next week.
  • BTP spreads continued to compress amid yet another day of impasse in the presidential elections. Italian political sources told MNI Draghi's chances are improving ahead of a weekend showdown vote. Elsewhere, periphery EGB spreads were mixed; Spain underperformed.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 0.4bps at -0.607%, 5-Yr is up 1.4bps at -0.305%, 10-Yr is up 1.4bps at -0.045%, and 30-Yr is up 1.1bps at 0.239%.
  • UK: The 2-Yr yield is up 0.7bps at 0.968%, 5-Yr is up 0.5bps at 1.07%, 10-Yr is up 1.6bps at 1.244%, and 30-Yr is up 1.9bps at 1.37%.
  • Italian BTP spread down 1.7bps at 132.8bps / Spanish up 1.5bps at 74.3bps
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