Trial now

Move towards another session low


Effective Fed Funds Rate


Mixed Trade Pre/Post Data, Implied Vol Lower


(H2) Key Support Still Intact

     EXCLUSIVE: Trade talks between the U.S. and China risk being drawn out
until as long as next year if President Donald Trump goes ahead with his threat
to slap higher tariffs on Chinese goods, prompting likely retaliation from
Beijing, trade experts advising the Chinese government told MNI. China could hit
back with its own punitive tariffs and by dropping previous promises to the U.S.
such as increasing imports of American goods and lowering levies on U.S. cars if
Washington raises tariffs on Friday as threatened, the advisors said. Talks
would probably stop for some time, before eventually resuming, said Wang
Haifeng, director of International Trade and Investment at the Chinese Academy
of Macroeconomic Research, run by the National Development and Reform
     TRADE: Exports fell 2.7% y/y in April after a 14.2% gain in March,
underperforming the market survey conducted by MNI which projected 3.7% growth,
data released by the General Administrative of Customs today showed. It was the
third year-on-year drop in the last five months. Imports rose 4.0% y/y,
rebounding from the 7.6% y/y fall recorded in March, beating MNI's median of
-4.0% and marking the first y/y rise in the past five months. The trade surplus
in April, as a result of smaller exports and larger imports, narrowed to $13.84
billion from $32.61 billion in March, lower than the forecast of $39.1 billion.
     LIQUIDITY: The People's Bank of China injected CNY10 billion via 7-day
reverse repos, adding liquidity for third straight day, resulting in a net
injection of CNY10 billion as no reverse repos mature, according to Wind
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) fell to 2.1000% from Tuesday's close of 2.2692%, Wind
Information showed. The overnight repo average decreased to 1.1800% from
Tuesday's 1.3920%. The overnight figure once dropped to as low as around 1.1000%
in early trading, the lowest in about four years, according to Wind Information.
     YUAN: The Chinese currency weakened to 6.7716 against the dollar from
Tuesday's close of 6.7607. The PBOC set the dollar-yuan central parity rate at
6.7596 today versus 6.7614 set on Tuesday.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.3375%, down from Tuesday's close of 3.3500, according to brokers.
     STOCKS: The benchmark Shanghai Composite Index dropped 1.12% to 2,893.76,
with pork shares suffering from continuous corrections as well as finance,
steel, coal and home appliance stocks at a low ebb, according to Wind
Information. Hong Kong's Hang Seng Index fell 1.23% to 29,003.20.
     FROM THE PRESS: Significant foreign capital has flowed into China via the
Bond Connect scheme, with CGBs becoming more popular for international investors
seeking hedging risks, Shanghai Securities Journal reported today. Foreign
investors brought CNY35.6 billion of China bonds via Bond Connect in April, a
rise of 60% m/m, the newspaper said citing data by China Central Depository &
Clearing. As of April, foreign investors held CNY1.11 trillion of CGBs, 70% of
their total holdings of Chinese bonds, followed by policy bank bonds, the paper
said citing CCDC data.
     The PBOC aims to boost market confidence via small dosage of liquidity
injection by reverse repos this week, China Securities Journal said in a
commentary. Generally, the PBOC does not inject liquidity at the beginning of a
month, as month-end fiscal funds already add, the newspaper added.
     Consultation is the way to solve trade frictions, and it is imperative that
the U.S. should work with China to reach a win-win agreement based on mutual
respect, Xinhua News Agency said in a commentary late Tuesday. Sino-U.S.
economic relations are a win-win relationship, not a zero-sum game, Xinhua
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]