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MNI: PBOC Drains Net CNY198 Bln Weds; Rates Unchanged

CHINA PBOC INJECTS CNY240 BILLION VIA 7-DAY REVERSE REPOS WEDS

CHINA SETS YUAN CENTRAL PARITY AT 7.1140 WEDS VS 7.1127

Futures Consolidate On Tuesday

EZ/UK Bond Supply Calendar: Italy Exchange, Green Gilt Due Wed

EZ/UK T-Bill Calendar: Greece, EU Auction Wednesday

MNI BRIEF: Lawmakers Signal Tough Hearing For BOC's Macklem

MNI BRIEF:Macklem-Fiscal Policy Turning Unhelpful On CPI Fight

MNI BRIEF: Stabilizing Prices Helps BOC Turn Neutral-Freeland

Goldman Favour Paying ECB Sep OIS, Yield Risks Skewed Asymmetrically Lower

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Late Friday Goldman Sachs noted that ECB September “pricing has failed to converge decisively towards a hike or a pause.”

  • “Though this has been relatively rare this cycle, the July shift to a fully data-dependent approach means this is a feature, and not a bug, of recent ECB communication.”
  • “As a result, market pricing is unlikely to sway the ECB and rather, we continue to expect a 25bp hike, and see value in paying the meeting.”
  • “Looking further out the curve, we believe rates are unlikely to move much higher on either a hike or a pause, for two reasons.”
  • “First, with the ECB essentially dismissing forward guidance only a meeting ago, we see limited scope for forceful communication about policy decisions ahead.”
  • “Secondly, even if the ECB was to try and provide a hawkish impulse through guidance, we see the currently weak dataset as likely to limit its effectiveness.”
  • “In that setup, we think forwards beyond the very front-end (such as 1y1y or 2y1y) are likely insulated from a significant repricing and that risks are skewed asymmetrically towards lower yields.”
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Late Friday Goldman Sachs noted that ECB September “pricing has failed to converge decisively towards a hike or a pause.”

  • “Though this has been relatively rare this cycle, the July shift to a fully data-dependent approach means this is a feature, and not a bug, of recent ECB communication.”
  • “As a result, market pricing is unlikely to sway the ECB and rather, we continue to expect a 25bp hike, and see value in paying the meeting.”
  • “Looking further out the curve, we believe rates are unlikely to move much higher on either a hike or a pause, for two reasons.”
  • “First, with the ECB essentially dismissing forward guidance only a meeting ago, we see limited scope for forceful communication about policy decisions ahead.”
  • “Secondly, even if the ECB was to try and provide a hawkish impulse through guidance, we see the currently weak dataset as likely to limit its effectiveness.”
  • “In that setup, we think forwards beyond the very front-end (such as 1y1y or 2y1y) are likely insulated from a significant repricing and that risks are skewed asymmetrically towards lower yields.”