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JGB TECHS

(M1) Bullish Focus

AUSSIE 10-YEAR TECHS

(M1) New Multi-Month Highs

     EXCLUSIVE: China's planned CNY11 trillion fiscal expansion could help
annual growth hit 3% this year, despite disappointment in some quarters over the
size of stimulus package, policy advisors told MNI, with some expecting GDP to
rise by as much as 5% in the best-case scenario. China plans to raise its
deficit by CNY1 trillion in 2020 to CNY3.76 trillion (over 3.6% of GDP), issue
CNY1 trillion special Covid-19 treasury bonds and push forward CNY2.5 trillion
in tax and fee cuts, while assigning an increased CNY3.75 trillion quota to
special purpose bonds for local governments to boost infrastructure investment,
according to the Government Work Report delivered by Premier Li Keqiang last
month.
     LIQUIDITY: The People's Bank of China (PBOC) injected CNY60 billion via
7-day reverse repos with the rate unchanged at 2.2%. The operation aims to keep
the liquidity reasonable and ample, the PBOC said in a statement on its website.
     DATA: China's May inflation slowed to 2.4% y/y from 3.3% in April as food
supplies improved on eased coronavirus restrictions and better weather. The May
result was the lowest level since March last year. Analysts had expected 2.5%
y/y. Factory-gate prices extended falls to a more than four-year low due to the
high base in the same period last year.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) slightly increased to 1.9593% from Tuesday's close of
1.9096%, Wind Information showed. The overnight repo average rose to 1.8456%
from the previous 1.8394%.
     YUAN: The currency strengthened to 7.0670 against the dollar from 7.0882 on
Tuesday. PBOC set the dollar-yuan central parity rate lower for a eighth day at
7.0703 compared with the 7.0711 set for Tuesday.
     BONDS: The yield on 10-year China Government Bond was last at 2.8275%, up
from the close of 2.8225% on Tuesday, according to Wind Information. 
     STOCKS: The Shanghai Composite Index declined 0.42% to 2,9423.75. Hang Seng
Index edged down 0.03% to 25049.73.
     FROM THE PRESS: The proceeds from Special China Government Bonds and
increased fiscal deficits should be allocated to county-level administrations as
soon as possible through a new fiscal transfer system to support
small-and-medium enterprises and people's living expenses, according to a
statement from the State Council's executive meeting. The meeting, chaired by
Premier Li Keqiang on Tuesday, determined that the funds, totalling CNY2
trillion, would also be used to finance public spending on the construction of
public health facilities and other pandemic-control activities.
     China's banks will have to significantly reduce outstanding high yield
structural deposits by the end of this year under new requirements from the
banking regulator, the Shanghai Securities News reported citing an unnamed
source. The move aims to prevent companies from conducting carry trades, as
there were signs that firms are borrowing at cheap prices due to ample
liquidity, and depositing the borrowed money for guaranteed higher yields rather
than investing in the real economy as the central government hoped, the
newspaper said.
     China's education authority issued an alert on Tuesday warning students of
rising racial discrimination and lingering coronavirus risks in Australia. The
alert came after China announced punitive tariffs on Australian barley in May, a
move considered retaliation to Australian endorsement of U.S. proposals to
investigate the origin of the pandemic virus, MNI noted. Education agencies
interviewed by Global Times said overseas student numbers in Australia would be
sluggish for at least a year.
--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
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