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PBOC Brings August Liquidity Addition To CNY 200bn

  • INDIA: Yields lower in early trade, 10-Year yield dropping to its lowest since August 18. It is a busy session today; participants will digest GDP data and a speech from RBI Governor Das today. Das will speak at the annual FIMMDA-PDAI conference later today, he said last week that the RBI is in no hurry to adjust policy settings and will telegraph any changes to markets well in advance, emphasizing that the recovery has some way to go. Meanwhile fiscal deficit data is on the docket and Q2 GDP figures will be published at 1300BST/1730IST. GDP is expected to have grown 21% Y/Y. Indian states will sell bonds today.
  • SOUTH KOREA: Futures higher with cash yields lower and some bull steepening evident. South Korea has proposed a record high budget of KRW 604.4tn for next year as it plans to maintain expansionary fiscal spending to cement the economic recovery and narrow social gaps caused by the pandemic; the budget represents an 8.3% rise from the current year. The government plans to submit the budget proposal to the National Assembly on Friday for approval. To finance the budget South Korea will issue up to KRW 77.6tn, bringing total issuance in 2022 to KRW 167.4tn; this compares to KRW 186.3tn in 2021 and issued KRW 174.5tn in 2020.
  • CHINA: The PBOC injected a net CNY 40bn via OMO's today, the fifth day of injections heading into month-end that brings additional liquidity to CNY 200bn. The PBOC has reiterated that the injections are to ensure liquidity into month end and should not be seen as easing, the Central Bank injected a net CNY 40bn at the end of July and CNY 100bn at the end of June. The overnight repo rate rose some 38bps to 2.2087% while the 7-day repo rate fell 5bps to 2.35%. Bond futures higher for a third straight session amid some risk off sentiment in the region. 10-Year just shy of a contract high of 100.235 hit at the start of August.
  • INDONESIA: Curve twist flattens, Pres Widodo announced an extension to Covid-19 restrictions through Sep 6, while loosening curbs in some localities, after the daily nationwide case count fell to the lowest point since Jun 3. Indonesia's Markit M'fing PMI will be released tomorrow, just hours ahead of the monthly CPI report. Last Friday, Bank Indonesia estimated August CPI to be +1.57% Y/Y based on their weekly survey.

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