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Repo Rates Creep Higher

CHINA RATES

The PBOC drained CNY 20bn from the financial system again, a total of CNY 80bn from the CNY 100bn injected heading into month-end. Repo rates have crept higher for the second session but are still well below recent highs. Higher repo rates has put pressure on the cash space, yields higher across the curve with some steepening seen. There were reports that foreign investors bought CNY 13.39bn of Chinese government bonds in June, the second month of lower purchases. Local government bonds through saw net purchases of CNY 730m, the biggest purchase on record.

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