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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

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The PBOC matched injections with maturities today, repo rates are mixed but within recent ranges. The overnight repo rate is down 17bps at 19288%, while the 7-day repo rate is up 23bps at 2.1312%. Futures are higher, snapping a four day losing streak, 10-year future is up 14.5ticks at 99.955. Equity markets are slightly lower.

  • There are fears of further regulation with a statement from the State Council yesterday saying it would actively work on legislation in areas including national security, technological innovation as well as anti-monopoly to improve the legal framework and help govern the country. The CBIRC has also laid out new guidelines for cracked down on improper marketing and pricing practices in insurance technology platforms
  • US Deputy Secretary of State Sherman will meet with China's ambassador to the US on Thursday, while there are also reports that US Tsy Sec Yellen is weighing a trip to China in the coming months.
  • Data yesterday showed that new credit rose at the slowest pace since February 2020, the start of the pandemic. Aggregate financing was CNY 1.06tn, lower than CNY 3.7tn in June. Credit expansion usually weakens in July after a spike in June as banks seek funding arrangements into quarter end. The recent RRR cut should also spur lending in the coming months.