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     TOP NEWS: USDCNH traded flat yesterday at the top end of its recent range,
with the pair on the front foot this morning at 6.8724 ahead of the PBOC fix.
Yesterday's firmer than expected CPI reading for August (which came in at 2.3%
y/y up from 2.15 in July) failed to provide any support to the yuan. 2-year swap
rate differentials between China and the US have remained stable over recent
trading with both markets edging higher. The spread sits at 4.5bps as of 9:10 am
Beijing time. 
     LIQUIDITY: The People's Bank of China (PBOC)skipped open market operations
on Tuesday, citing "reasonable and ample" liquidity. There is no change in
liquidity today with the absence of maturing reverse repos, according to Wind
Information. No reverse repos mature this week, according to Wind Information.
CFETS-ICAP money-market sentiment index closed at 51 on Monday, up from 33 on
     YUAN: The yuan rose to 6.8620 against the dollar from Monday's closing of
6.8655. Earlier today, the PBOC set the yuan central parity rate at 6.8488,
weaker than Monday's 6.8389.
     MONEY MARKET RATES: The benchmark seven-day deposit repo average decreased
to 2.6679% on Tuesday from 2.6722% Monday, while overnight average climbed to
2.5863% from 2.5652%: Wind Information.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.6700%, up from Monday's close of 3.6600, according to Wind Information.
     STOCKS: The Shanghai Composite Index fell 0.18% to close at 2,664.80. Hong
Kong's Hang Seng Index declined 0.37% to 26,515.11. 
     FROM THE PRESS: China's reform and opening up of its economy shouldn't be
impacted by the U.S. needs, the official People's Daily said. China is in a
critical position to tackle various challenges, including the trade war, on its
path to become a strong country from an emerging economy, the newspaper said.
China should not panic, but instead calmly tackle these problems and focus on
its own affairs, the daily said. The Chinese people should be more confident and
united, the newspaper said.
     Inflation in China is expected to be steady and controlled, Shanghai
Securities News reported. Core CPI only accelerated by 0.1 percentage point to
2.0%, indicating no obvious increase, the newspaper said, citing Zhang Jun,
chief economist of Huaxin Securities. The increase in vegetable prices will not
last long as extreme weather conditions will not continue, and as the swine flu
may not significantly affect pork prices, Zhang said. Property rental prices
will not continue to rise nationwide as property policies are in place, the
newspaper said, citing Lian Ping, chief economist of the Finance Research Center
of Bank of Communications.
     The Chinese government is drafting property tax laws that may be
implemented by 2023, the 21st Century Business Herald reported, citing an
unidentified source. The legislation is expected to speed up as some provinces
already discussed and sought opinions from related departments in April, the
newspaper said. Problems and concerns on the structure and ideas of the tax have
been cleared, the newspaper said, citing Lou Jianbo, director of the Property
Law Research Center at Peking University.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
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