Soft Chinese PMI Data Helps Move Away From Lows

A light bid comes in as the latest Chinese Caixin m’fing PMI print comes in softer than expected, printing at 48.1 (BBG Median 49.9), representing the fastest rate of contraction observed in the reading since the COVID-driven contraction in Feb ’20.

• The survey collator noted that production fell at the quickest rate observed for just over two years amid tighter COVID restrictions. Steep declines in total new work and foreign demand were also een, while suppliers' delivery times worsened and cost pressures intensified. That made for pretty grim reading all around, with China’s choice to continue with localised COVID restrictions the clear driver here, as pockets of cases spring up over the country.
• The space is still comfortably cheaper on the day, but the release has helped the space to move further away from session cheaps. TYM2 last -0-13 at 122-15, while cash Tsys run ~2.5bp cheaper across the curve, when compared to settlement levels.