Overnight Repo Rate Jumps Ahead Of Holiday

The PBOC injected CNY 100bn via 14-day reverse repos on the final trading session before an extended break. China will observe a weeklong holiday starting tomorrow, with mainland markets returning on Friday Oct 8. The overnight repo rate jumped 85bps to 2.20%, matching the PBOC's prevailing 7-day rate, while the 7-day repo rate has fallen 28.25bps to 2.2634%.

• Futures are lower, the 10-year contract down around 14 ticks and touching session lows. As a reminder manufacturing PMI slipped into contraction for the first time since May 2020, while non-manufacturing unexpectedly rose into expansion, the Caixin manufacturing PMI print also rose.
• Downside may be moderated by expectations that the PBOC may implement another across-the-board cut to the banks' required reserve ratios in Q4 to further loosen up credit and inject long-term capital to help banks' boost lending. There was a piece citing analyst Wang Qing with Golden Credit Rating International in the the 21st Century Business Herald where Wang supports the idea.
• Elsewhere, the MOF announced it will sell a total of $4bn sovereign bonds across issues for 3-year, 5-year, 10-year and 30-year paper.