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(Z1) Off Lows, But Remains Weak

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A Flat Restart

POLICY: China should provide more credit support for bonds issued by small and medium companies to boost their attractiveness, streamline the issuing process, and help develop the high-yield bond market to step up direct financing for such firms, a research paper published by the People's Bank of China said on Tuesday. Outstanding bonds by SMEs accounted for just 1.3% of all bonds by 2019, according to the paper.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2% on Tuesday. This keeps the liquidity unchanged after offsetting the maturity of CNY10 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.2435% from 2.1815% on Monday, Wind Information showed. The overnight repo average rose to 1.8275% from the previous 1.7955%.

YUAN: The currency weakened to 6.5677 against the dollar from 6.5626 on Monday. The PBOC set the dollar-yuan central parity rate higher for a fifth day at 6.5641, the weakest point since December 1 of last year, compared with the 6.5416 set on monday.

BONDS: The yield on 10-year China Government Bond was last at 3.2450%, up from Monday's 3.2350%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.62% to 3456.68 while the CSI300 index gained 0.95% to 5,094.73. Hang Seng Index increased 0.84% to 28577.50.

FROM THE PRESS: The U.S. will make it harder to engage in talks with China if it keeps existing punitive tariffs, said Global Times. The comments came in an editorial in response to U.S. Trade Representative Katherine Tai suggestion to keep the tariffs as leverage in potential talks. Dropping the tariffs could create a favorable atmosphere to address issues, the government-run newspaper said. The two sides should urgently improve trade relations, something that still tie the two together while political and security issues further divide them, the editorial said.

China's steel industry will reduce carbon emissions by 30% from the peak in 2030, or 420 million tons a year, as a part of the country's stated overall plan to reach peak carbon emissions by 2030 and net-zero by 2060, the Economic Information Daily said. China accounts for more than 60% of the global emissions by steelmaking, the newspaper said citing Li Xinchuang, an official at Metallurgical Industry Planning and Research Institute. China plans to restructure the steel industry and reduce the production of small and medium-sized rebars, it said citing researcher Yin Ruiyu at the China National Engineering Research Institute.

China may generate over CNY60 trillion through cloud-based computing, big data, blockchain and other digital industries through 2025 under its five-year development plan, reaching about 10% of total GDP, the Economic Information Daily said citing Yu Xiaohui, President of the China information and Communication Research Institute. China should better integrate the digital economy with the real economy, promote digitization of manufacturing and facilitate businesses' transformation, the Daily reported citing Sun Ke, an official at China Academy of Information and Communications Technology

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