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EUROZONE ISSUANCE

EGB Supply for W/C Jul 26

USDCAD TECHS

Pullback Considered Corrective

US TSYS SUMMARY

What a Short, Strange Trip It's Been

GLOBAL POLITICAL RISK

Pfizer, Moderna Jabs Retain High Trust; AZ, Sputnik Lower

AUDUSD TECHS

Trend Indicators Remain Bearish

     TOP NEWS: China's trade war with the U.S. is likely to disrupt the pace of
domestic economic reform, an advisor to the authorities told MNI in an
interview. "Over the past year or more, there have been signals that
policymakers may lift their obsession with growth to cope with issues
accumulated during the process of rapid development," Zhu Ning, professor at the
People's Bank of China School of Finance(PBCSF). "But I am worried the situation
may be reversed under the cloud of the trade war," Zhu said, noting many
reforming policies have been slowed, suspended or even cancelled in recent
months.
     TOP NEWS: China is unlikely to use its currency or its stockpile of U.S.
financial assets as weapons in retaliation against U.S. tariffs, but it may
restrict exports of supply chain components, an advisor to the authorities told
MNI in an interview. There is little room for China to use its currency as a
weapon or to dump U.S Treasuries, Zhu Ning, professor at the People's Bank of
China School of Finance (PBCSF), said. However, he did predict the yuan will
remain weak in the long run.
     POLICY: China is studying targeted measures to help Chinese and foreign
companies operating in the country to offset the most recent U.S. tariff action,
a Ministry of Commerce spokesman said. "We are assessing the impacts of the U.S.
tariffs on $200 billion Chinese exports to the U.S.," Gao Feng told a weekly
press conference, mentioning measures including simplified customs procedures
and lower related fees. China is also drafting rules to facilitate foreign
investment in listed companies, he said.
     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
on Friday, resulting in net drain of CNY110 billion in liquidity as that amount
of reverse repos matured today, according to a statement on the PBOC website.
The PBOC said month-end fiscal spending and government deposit into the banking
system would offset liquidity drain due to local government bond issuance and
reverse repo maturities. The PBOC so far this week has injected CNY6 billion via
OMO and CNY265 billion in MLF. CFETS-ICAP's money-market sentiment index closed
at 41 on Thursday, down from 49 on Wednesday.
     YUAN: The yuan strengthened to 6.8345 against the USD from Thursday's
closing of 6.8528. Earlier today, the PBOC set the yuan central parity rate
stronger for the second trading day at 6.8357, compared with Thursday's 6.8530.
The PBOC has set the fixing stronger for two days out of five this week.
     MONEY MARKET RATES: The benchmark seven-day deposit repo average decreased
to 2.6429% on Friday from 2.6469% Thursday, while the overnight average dropped
to 2.5134% from 2.5152%: Wind Information.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.6850%, down from Thursday's close of 3.6950%, according to Wind Information.
     STOCKS: The Shanghai Composite Index closed 2.5% higher at 2,797.48. Hong
Kong's Hang Seng Index rose 1.68% to 27,940.24.
     FROM THE PRESS: China should establish systems of indexes, policies,
standards, statistical records and performance evaluations of officials to
support high-quality growth, Xinhua reported, citing officials at a meeting with
President Xi Jinping. Financial regulators need to improve supervision, and
ensure that rule-setting doesn't clash with that of other jurisdictions,
officials stressed. China needs to better coordinate regional development, and
to deepen reforms and innovation in free-trade pilot zones, officials at the
meeting concluded.
     Strong economic fundamentals, the emergence of new growth engines and
structural industrial upgrades should support the yuan, Securities Daily
newspaper said. China's international balance of payments is reasonably
balanced, while foreign reserves are abundant and stable. The PBOC will also
continue to take measures to maintain yuan stability, the newspaper said.
     More than CNY600 billion in special bonds to support infrastructure
investment were issued from August to mid-September, including more than CNY200
billion in September, Economic Information Daily reported. The issuance should
support investment worth more than a trillion yuan, the newspaper said. Lenders
including Bank of China and China Construction Bank will also provide loans to
back the infrastructure spending, the newspaper said, citing unidentified
industry insiders.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]