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Expiries for Jul23 NY cut 1000ET (Source DTCC)


Flash June Factory Sales +1.9%


Downside Bund play

     BEIJING (MNI) - China's GDP is forecast to slow to 5.8% in 2020 following
6.1% growth this year, while the yuan is likely rangebound 7-7.2 against the
dollar next year, according to a report released on Wednesday by the National
Institution for Finance and Development, a policy research body under the
Chinese Academy of Social Sciences. 
     Countercyclical measures, such as boosting infrastructure investment and
implementing a structural short-term monetary policy, won't have impact until
first quarter (Q1) 2020, according to the report.
     Here are a few takeaways of a briefing by the institute introducing the
     - Overall leverage ratio in the Chinese economy rose by 1.6 percentage
points to 251.1% in Q3, compared with 249.5% in Q2. Policymakers have to contend
with a higher ratio if it wants to remain certain economic growth. 
     - The government may increase leverage but needs to increase fiscal deficit
ratio, which will likely be reflected in the budget early next year. The central
bank needs to increase holding of government bonds under efficient regulations. 
     - The yuan may remain a strong momentum as overseas investors bought more
Chinese assets to take advantage of the positive and potentially widening
short-term interest rate spread between that of China and the U.S. The yuan may
become more stable as trade conflicts ease. 
     - Inflation fuelled by surging pork prices may hit 4% in November and
average 4% in Q1, constraining monetary policy. 
- China is actively expanding regional trade agreements to support the economy. 
     - New debt default rose to CNY36.1 billion in Q3 due to increasing
bankruptcy reorg. It may rise further given companies' difficulties with
refinancing and slowing economic growth. The yield curve of bond market turned
flatter in Q3, indicating a higher downturn pressure. 
     - While local government special bond quotas for 2020 will be larger, this
category of debt isn't factored in deficit calculations, so it won't have any
impact on deficit ratio, which may still be 3% ceiling next year. 
--MNI Beijing Bureau; +86 (10) 8532 5998; email:
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