J.P.Morgan note that “if investor hesitation to chase duration longs in H1 was principally rooted in disappointment over the PBoC’s policy under-delivery, this week’s rate cut marks an important catalyst for a shift in investor sentiment, and opens up room to extend duration exposure. We remain skeptical that rates can extend to 2020 lows as the MLF rate cut does not shift the medium-term outlook of repo rates grinding higher. That said, we still see merit in remaining long duration. It’s not unusual for yields to fall 2-3x of the increment of OMO rate adjustment in the month following a rate cut. If near-term tightening risks implied by the forward IRS curve gets fully priced out, it could lead to 25-30bp cumulative gain in CGB yields, meaning this week’s rally is just over half of the potential move. We stay positive on CNY rates and hold on to longs in 5-Year CGBs.”
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.Free Access
Sign up now for free access to this content.
Please enter your details below and select your areas of interest.
Why Subscribe to
MNI is the leading providerof news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.
Our credibilityfor delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.
We are facing technical issues, please contact our team.
Your request was sent sucessfully! Our team will contact you soon.