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(Z1) Bearish Trend Condition

AUSSIE 10-YEAR TECHS

(Z1) Bearish Price Sequence

AUSSIE 3-YEAR TECHS

(Z1) Off Recent Highs

US 10YR FUTURE TECHS

(Z1)‌‌ Support Appears Exposed

     TOPS NEWS: China will seek to strengthen relations with the U.S. so that
they evolve into mutual respect and win-win cooperation, the official People's
Daily said Wednesday, ahead of U.S. President Donald Trump's arrival in Beijing
today. The two nations should consider each other's interests and concerns, and
appropriately resolve conflicts, the commentary said. It reiterated that China
will stick to its goal of denuclearization of the Korean peninsula and tackling
disputes with North Korea through dialogue. It also stressed China would deepen
supply-side structural reform, further its opening up, reduce significantly its
restrictions on market access, as well as implement high-level policies to
facilitate trade and make foreign investment more convenient. (People's Daily)
     TOP NEWS: The People's Bank of China injected CNY70 billion in seven-day
reverse repos, CNY30 billion in 14-day reverse repos and CNY60 billion in 63-day
reverse repos via open-market operations Wednesday. This resulted in a net drain
of CNY40 billion for the day, as a total of CNY200 billion in reverse repos
matured on Wednesday. The CFETS-ICAP money-market sentiment index ended at 43 on
Tuesday, up from 38 at Monday's close. The lower the reading, the better the
liquidity conditions in the interbank market. The PBOC did not give a further
explanation of its operations this morning. 
     POLICY: Despite growing concerns among Chinese bond investors about the
domestic inflation outlook, China analysts generally expect price pressures to
remain relatively modest next year. Analysts with 10 Chinese financial firms
generally agreed that prices would remain under control in 2018. Nine of the ten
predicted headline CPI would not exceed 2.5%, with two even expecting CPI to be
lower than 2%. The one analyst who expected 2018 CPI to be higher than 2.5% said
it would not exceed 3.0%.
     DATA: Balanced cross-border capital flows helped nudge up China's
foreign-exchange reserves in October, the ninth straight month that forex
reserves have increased. Foreign-exchange reserves increased $703 million during
the month to $3.1092 trillion, the highest level since last October but much
lower than the $16.98 billion rise in September, according to data released
Tuesday by the People's Bank of China. "In October, cross-border capital flows
and transactions became more balanced, and the supply and demand of foreign
exchange was overall balanced," the State Administration of Foreign Exchange
(SAFE) said on its official website. "In the international financial market,
non-dollar currencies depreciated against the dollar while asset prices in
general appreciated, helping the level of foreign-exchange reserves to remain
stable," SAFE said.
     DATA: Some 2.25 million passenger cars were sold in China in October, a
gain of 2% from September and 3% from a year ago, the China Passenger Car
Association said Wednesday. The bigger-than-expected rise was due to a recovery
in consumers' purchasing power because of increasingly stable housing prices as
well as car-makers' sales promotions during the month, the association said. SUV
sales led growth, up 5% on the month. Sales of new energy cars grew 12% m/m to
65,000 in October, double the year-ago level, it noted. China's environmental
protection campaign and the cooling of the property market will continue to
boost passenger car sales this winter, the group predicted.
     RATES: Money market rates rose on Wednesday after the PBOC drained a net
CNY40 billion via open-market operations. The seven-day repo average was last at
2.7978%, up from Tuesday's average of 2.7587%. The overnight repo average was at
2.5976%, compared with Tuesday's 2.5376%.
     RATES: The Ministry of Finance sold CNY33 billion in five-year treasury
bills at a yield of 3.8719% in an auction on Wednesday. The yield was lower than
the 3.9203% for bonds with the same maturity in the secondary market on Tuesday.
     YUAN: The yuan fell against the U.S. dollar on Wednesday after the People's
Bank of China set a weaker daily fixing. The yuan was last at 6.6406 against the
U.S. unit, dropping 0.12% compared with the official closing price of 6.6324 on
Tuesday. The People's Bank of China set the yuan central parity rate against the
U.S. dollar at 6.6277 on Wednesday, weaker than Tuesday's 6.6216. 
     BONDS: The yield on benchmark 10-year China government bonds was last at
3.8800%, down from the previous close of 3.8950%, according to Wind, a financial
data provider.
     STOCKS: Stocks were up, led higher by the iron ore and coal sectors. The
benchmark Shanghai Composite Index closed 0.06% higher at 3,415.46. Hong Kong's
Hang Seng Index was 0.09% lower at 28,967.88.
     FROM THE PRESS: China's replacement of the business tax with a value-added
tax has reduced the business tax burden by more than CNY1 trillion, the official
People's Daily said in a front-page report Wednesday. From May last year through
September this year, corporate tax cuts totaled CNY1.0639 trillion, of which
CNY488.9 billion was cut from May to December last year and CNY575 billion was
cut in the first nine months this year, the report said. (People's Daily)
     China will implement a series of policies to develop the real economy by
redirecting capital to help growth, the Economic Information Daily reported
Wednesday. Chinese President Xi Jinping stressed in his keynote speech at the
19th Communist Party Congress last month that China needs to transform its
method of development to build a modern economic system. The newspaper cited
various analysts saying that China needs to enhance the efficiency and quality
of development and, in particular, speed up development of the manufacturing
sector by enhancing its ability to innovate. Imbalances in the real economy show
that reform of the Chinese corporate system has not caught up with the need to
upgrade and restructure the economy, Chi Fulin, director of the China Institute
for Reform and Development and deputy head of the China Society of Economic
Reform, was quoted as saying. He also pointed out the imbalances that exist
between the property sector and the real economy that need to be addressed.
(Economic Information Daily)
     Local asset management companies (AMCs) have developed rapidly because of
increased demand and government policy support, but local governments are now
looking to enact regulations to control their activities, the Economic
Information Daily reported Wednesday. Various cities and provinces are preparing
to issue new regulations on the sector, with Jiangxi and Shandong provinces
recently announcing interim regulations, the report said. To date, some 50 new
provincial and municipal AMCs have been established, the newspaper said. The
regulations aim to control risks and direct AMCs to focus on their main
businesses instead of other financing operations. The newspaper also argued that
standardized national regulations should be created. (Economic Information
Daily)
     Consumer finance asset-backed securities have developed rapidly under the
strict supervision of financial regulators, the China Securities Journal
reported Wednesday. At the end of September, CNY190 billion in consumer finance
ABS had been issued. Chinese exchanges require issuers to have healthy balance
sheets and good risk controls to keep risky companies from entering the market,
the newspaper said. The Chinese consumer finance ABS issuers are mainly leading
companies in consumer lending such as Alibaba's Ant Financial and JD Finance of
JD.com. Chinese authorities have issued strict rules to stop illegal assets from
being used in ABS instruments to ensure order in the sector, the report said.
(China Securities Journal)
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
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