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Risk-Positive Impulse Fades As Chinese Equities Open Lower

CROSS ASSET

The early risk-positive flows have reversed, with core bonds off of lows, JPY back from worst levels and e-minis around neutral levels. USD/CNH now prints around CNH6.7250 (after failing to break below CNH6.7000 early on) with Chinese equities on the backfoot after Premier Li’s warnings surrounding the Chinese economy. The PBoC has outlined its mechanism to support lending to SMEs, but wider macro headline flow remains fairly limited. Note that the BoK’s post-decision statement pointed to greater focus re: inflation, which is no surprise given Governor Rhee’s recent comments re: the potential for larger rate hikes later in ’22 & warnings on inflation, although USD/KRW is trading as a wider function of risk appetite.

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The early risk-positive flows have reversed, with core bonds off of lows, JPY back from worst levels and e-minis around neutral levels. USD/CNH now prints around CNH6.7250 (after failing to break below CNH6.7000 early on) with Chinese equities on the backfoot after Premier Li’s warnings surrounding the Chinese economy. The PBoC has outlined its mechanism to support lending to SMEs, but wider macro headline flow remains fairly limited. Note that the BoK’s post-decision statement pointed to greater focus re: inflation, which is no surprise given Governor Rhee’s recent comments re: the potential for larger rate hikes later in ’22 & warnings on inflation, although USD/KRW is trading as a wider function of risk appetite.