O/N Repo Rate Steadily Climbing

The PBOC matched injections with maturities at its OMOs today; repo rates are higher, the overnight repo rate has been climbing steadily through July, rising from July 1 lows of 1.2841% to hit 2.1846%, this is still below highs seen in previous months. The 7-day repo rate has remained steady and is within recent ranges at 2.1987%. Futures are higher, 10-year future up 3 ticks at 99.535.

• There were reports in the Shanghai Securities News that bidding at recent local government bond auctions indicates that government bond issuance is becoming more market driven. The piece says winning bids at auctions in Beijing and Hubei were both 15bps above the lower limit, breaking an implied rule that the spread should be 25bps comparing to central government's bond which indicates local bonds are less influenced by policy makers.
• Elsewhere, the selloff in Evergrande's bonds continues on concerns that the firm isn't selling assets fast enough to repay its liabilities. The company arranged a transfer of $352m to pay coupons on for dollar bonds, the company has liabilities of $301bn.