Futures Bounce After Data

The PBOC matched maturities with injections, the twenty ninth straight session, the last time the bank injected funds into the financial system was Feb 25, the PBOC also drained CNY 6.1bn of liquidity at the MLF operations yesterday, letting a total CNY 156.1bn of MLF and TMLF loans roll off, and injecting CNY 150bn. Repo rates are higher, the overnight repo rate up 4.2bps after rising around 10bps yesterday, the 7-day repo rate up 7bps at 2.2007%, just above the prevailing 2.20% rate.

• The China data dump was overall slightly weaker than expected, which saw bond futures erase losses. 10-year future still down 3.5 ticks at 97.665, but off session worsts. GDP was a slight miss at 18.3% against expectations of 18.5%, industrial production also below estimates by 2ppts at 24.5%, while fixed asset investments missed by 0.4ppts at 25.6%. One bright spot was retail sales at 33.9%. These figures are strong on an objective basis, but benefit from a low base effect, and the misses against estimates indicate the recovery is progressing slightly more slowly than expected.