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J.P.Morgan: Decisive Shift Lower In Yields Requires PBoC Easing

CHINA RATES

J.P.Morgan note that "near-term macro settings remain favourable for rates as month-end liquidity tightness fades and risks of upcoming August data skew to the downside. A decisive shift lower in yields, however, still requires the PBoC to deliver policy rate easing."

  • "The PBoC's liquidity supply since last week should be assessed in the context of a sharper-than-expected late-month surge in funding costs and a still thin liquidity base as July's net drains negated a large part of the liquidity provision via the RRR cut."
  • "Tighter rules over wealth management products (WMP) and a transition to market-value-based valuation could risk redemptions and reshuffles of WMP investment portfolios. Financial and credit bonds should face heavier selling pressure, while the impact on risk-free assets is likely to be limited unless a broad-based liquidity crunch ensues."
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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