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The ~1.5-2.5% fall in Chinese equity..........>

CHINA
CHINA: The ~1.5-2.5% fall in Chinese equity indices has failed to weigh much on
fixed income markets. 10-year government bond yields are marginally lower at
3.489%, testing yesterday's lows but holding up well considering the fall in
stocks. Interest rate swaps are up on the day with the 2-year trading up 2.25bps
at 2.8525%.
- The yuan is also trading more in line with the stability in rate markets than
the large drop in stocks, with USDCNH trading slightly higher on the day at
6.9450. The pair appears to be consolidating its gains above Wednesday's high
ahead of a run at the Nov 1 high of 6.98. Above here would open the key 7.0
level which the PBOC might look to defend.
- An official researcher told MNI yesterday that the PBOC is tolerating a wider
band for yuan volatility, but may still defend a key psychological level.  

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