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Futures Hit Contract High

CHINA RATES

The PBOC injected a net CNY 20bn today for the second consecutive day after refraining from injections since the end of June. Despite the injection repo rates are higher, the overnight repo rate is up 53bpd at 2.1737%, the 7-day repo rate is below yesterday's high but at 2.287% is still above the PBOC's rate. Futures have jumped higher, the 10-year up 21.5 ticks at making a new contract high at 100.10, the sell off in Chinese equities not spreading to bonds today.

  • Chinese stocks are back under pressure today, despite the injection of liquidity. We mentioned earlier that pressure on some of the recent "usual suspects" across China & Hong Kong i.e. China Evergrande, Alibaba, Meituan and Tencent, is adding to the downward impetus for risk appetite. The pressure originated in the NASDAQ 100 e-mini contract on the back of Amazon's quarterly earnings report.

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