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US TSY FUTURES

BLOCK, 10Y Buy

USDJPY TECHS

Trend Conditions Remain Bullish

FED

Reverse Repo Operation

FOREX

US Outperformance Keeps Sending EURUSD Lower

US TSY FUTURES

New Bond Highs

POLICY: The People's Bank of China will ensure the continued healthy development of the real estate market and safeguard the legitimate rights of homebuyers, according to a statement on its website following the Q3 meeting of the central bank's Monetary Policy Committee.

POLICY: China should establish a national-level fund to help with the green transformation, so to minimize possible contagion to the financial sector as many high-carbon industries and enterprises will face severe pressures amid the green push, according to a report by the Green Finance Committee of China Society for Finance and Banking sent to MNI.

LIQUIDITY: The PBOC injected CNY100 billion via 14-day reverse repos with the rate unchanged at 2.35% on Monday. The operations lead to a net injection of CNY100 billion as no reverse repos maturing today, according to Wind Information. The operation aims to keep liquidity stable by the end of the quarter, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.9232% from 1.9622% on Friday, Wind Information showed. The overnight repo average increased to 1.7235% from the previous 1.6792%.

YUAN: The currency strengthened to 6.4614 against the dollar from 6.4645 on Friday. The PBOC set the dollar-yuan central parity rate higher at 6.4695, compared with the 6.4599 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 2.9175%, up from 2.9103% on Sunday, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.84% to 3,582.83 while the CSI300 index rose 0.58% to 4,877.37. Hang Seng Index edged up 0.07% to 24,208.78.

FROM THE PRESS: The yuan's weakening in August didn't necessarily spell the end of the currency's current round of rally, Guan Tao, the chief global economist of BoC International and a former forex official, wrote in a column published by the 21st Century Business Herald. The yuan's movement may become more unpredictable as it gets more closely linked to asset prices, and the exchange rate will fluctuate more in excess, Guan wrote. The yuan has become more like a mature currency as the exchange gets more market-based, and its gains or losses are no longer simply tied to trade surpluses, wrote Guan. The yuan's recent round of appreciation was also not tied to the banks' exchange settlements, including those done on behalf of their clients, Guan wrote.

China's consumption will continue to recover steadily in October and the annual retail sales is expected to total CNY44 trillion, a gain of 12.5% y/y or about 8% over 2019 before the pandemic, the Securities Daily reported citing an official from the Ministry of Commerce. The ministry will promote consumption in the upcoming week-long holiday in October as well as the year-end sales season, the daily said citing Wang Bin, deputy director of the Department of Consumption Promotion. The ministry will stabilize the sales of big-ticket items including automobiles, home appliances and furniture as well as catering, which account for one-fourth of retail sales, mainly by encouraging the replacement of old products and expand the consumption of used cars, the daily cited Wang as saying.

Two Canadians, Michael Kovrig and Michael Spavor, confessed their guilt for crimes and were released on bail for medical reasons before they departed China on a plane to Canada on Friday, the Global Times reported citing a source close to the matter. After the confirmation from related departments and diagnosis of professional medical institutes and under the guarantee of the Canadian ambassador to China, the two were released on bail, the newspaper said citing the source. The two Canadians wrote confession and repentance letters and in case of violation, China can resume the trial of the alleged criminal acts, the newspaper said.

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