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CHINA RATES

China Repo Rates Decline: Wind

CHINA PRESS

EU Should not Risk Invest Agreement: China Daily

JGB TECHS

(M1) Bullish Focus

AUSSIE 10-YEAR TECHS

(M1) New Multi-Month Highs

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
for the third day, resulting in a net drain of CNY180 billion given the same
amount of reverse repos matured, according to Wind Information. The total
liquidity in the banking system is at a relatively high level, which can absorb
the impact of matured repos and government bond issuance, the PBOC said on its
website.
     DATA: The Caixin China manufacturing Purchasing Managers' Index (PMI)
gained 0.5 to 51.2 in June from the previous month, staying in expansionary zone
above the breakeven 50 for two months, signalling a further rise in production
and a renewed increase in total new business. 
     RATES: The seven-day weighted-average interbank repo rate for depository
institutions (DR007) declined to 2.0257% from 2.3013% on Tuesday, Wind
Information showed. The overnight repo average rose to 1.9689% from 1.8298%.
     YUAN: The yuan strengthened to 7.0611 against the dollar from 7.0741 on
Tuesday. PBOC set the dollar-yuan central parity rate lower at 7.0710, compared
with the 7.0795 set on Tuesday.
     BONDS: The yield on 10-year China Government Bonds was last at 2.8700%, up
from the close of 2.8500% on Tuesday, according to Wind Information.
     STOCKS: The Shanghai Composite Index rose 1.38% to 3025.98. Hong Kong's
stock market is closed for today.
     FROM THE PRESS: The People's Bank of China lowered the rates for re-lending
and re-discounting programs by 25 bps to boost lending to small firms but the
move does not mean the central bank embraces easier monetary policy, according
to the China Securities Journal citing Li Qilin, the chief economist with Yuekai
Securities. The Journal said the overall easing of monetary policy can create
arbitrage opportunities preventing money flowing into the real economy. The
growths of M2 and total social financing have reached central bank targets and
economic activity is resuming, which also means the central bank does not have
the need for any further monetary easing, Li added. 
     The National Security Law for Hong Kong safeguards the principle of "one
country, two systems" and will prevent Hong Kong from becoming the most
turbulent city in Asia, Global Times said in an editorial. Neither the central
government nor Chinese society wants to end the "One Country, Two Systems"
principle, but China won't allow extreme movements in Hong Kong can collude with
the US and other external forces to create chaos in the city, the newspaper
said.
     Chinese local government financing vehicles sold CNY2.13 trillion in bonds
in the first half of 2020, CNY300 billion higher than the last peak, according
to the Economic Daily citing data from Wind Information. Zhou Yue, the chief
fixed income analyst with Sinolink Securities, told the newspaper that about 79%
of the money raised by the bonds was used to substitute for old debts. Due to
their backing by local governments the market considered the financing vehicles
had better quality credit, so the bonds were sold at higher prices this year
than other bonds, Zhou said.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]