Repo Rates Jump As Liquidity Drain Continues

Repo rates jumped in China, the Central Bank drained a net CNY 190bn via OMOs as the pre-Golden Week liquidity additions continue to roll off. Overnight rate up 98bps at 2.1429, 7-day rate up 43bps at 2.0375% as the rates invert again for the first time since early September. Futures dropped with the 10-Year falling 34 ticks while in the cash space the 10-Year yield rose some 5bps to the highest level since July as stocks found favour. Elsewhere high yield dollar bonds dropped as Evergrande contagion fears intensified, it follows a yield surge in junk rated dollar bonds last week with levels rising to the highest in a decade.