July 19, 2024 05:03 GMT
Liquidity Injection Continues, Bond Yields Steady As Market Awaits Plenum Details
CHINA RATES
Chinese News Agency Xinhua released the Central Committee’s communique Thursday noting the adoption of a resolution on “further comprehensively deepening reform and advancing Chinese modernization.”
- Xi has repeated his push for self-sufficiency in science and technology amid further tensions with the U.S and an uncertain outcome in the White House. The communique noted it is necessary to “better maintain market order” while stimulating “innovative vitality.” Prioritizing “high quality development” including efforts to update China’s supply chain were noted while stressing the need to “prevent and resolve risks” in the economy stemming from the real estate sector, local government debt and medium size financial institutions that are debt ridden.
- This is the first output from the plenum, and we await a more detailed document providing detail on policy. There will be plenty of headlines in the coming days. What is key to watch from a financial markets point of view will be impacts on the process of opening up and liberalization of China’s financial system.
- The PBOC injected CNY57bn via 7 day reverse repo at 1.8% this morning further supporting liquidity in the system
- Bonds relative unchanged to 0.5bps higher across the curve: 2yr 1.62% 5 yr 2.26% 30 yr 2.47%.
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