MNI China Daily Summary: Monday, June 3

MNI BRIEF: Caixin May Manufacturing PMI Hits Over Two-year High

MNI: China CFETS Yuan Index Up 0.03% In Week of May 31

MNI: PBOC Conducts CNY2 Bln Via OMO Mon; Liquidity Unchanged

MNI: PBOC Sets Yuan Parity Lower At 7.1086 Mon; -1.90% Y/Y

CHINA PBOC INJECTS CNY2 BILLION VIA 7-DAY REVERSE REPOS MON

MNI: US APR CONSTRUCT SPENDING -0.1%

MNI: US ISM MAY MANUF PURCHASING MANAGERS INDEX 48.7

US S&P Manufacturing PMI Revised 0.4 points higher to 51.3

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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More Pain Trade for Rate Bears

US TSYS SUMMARY
Another day of pain for staunch shorts willing or able to hold onto positions. Yields receded to levels not seen since early Feb, 30YY fell to 1.8551% low, 1.8852% last; 10YY 1.2479% low and testing 200DMA before paring back midday.
  • Coincidentally, Tsys peaked/started to recede around time ECB strategy review released (in-line: adopting symmetric 2% inflation target expected).
  • No immediate reaction to weekly claims climbing 2k to 373k -- higher than est of +350k, while continuing claims recedes slightly (-.145M to 3.339M vs. 3.35M exp).
  • Both rates and equities are traded back near the middle of their respective ranges after the rates closing bell: Tsys but well off highs (5s30s yield curve actually a little steeper on day at 117.129 (+1.395) while equities were weaker ESU1 -43.0 at 4306.75 vs. 4279.25 low.
  • Heavy volumes traded on day with lions share of TYU1 1.75M occurring before midday. Heavy option volumes with call skew outpacing puts for first time in over a year. Nevertheless, willing put buyers and existing long put positions continued to fade the underlying rally.
  • The 2-Yr yield is down 2.4bps at 0.1904%, 5-Yr is down 4.3bps at 0.7356%, 10-Yr is down 3bps at 1.2862%, and 30-Yr is down 2.9bps at 1.9091%.
  • Friday focus on June CPI: MoM (0.6%, 0.5% est); Ex Food and Energy MoM (0.7%, 0.4% est).
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