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The divergence in performance between.........>

CHINA
CHINA: The divergence in performance between Chinese stocks and rates is
continuing today with the CSI300 breaking below its Aug 20 low while 2-year
swaps trade flat clinging to yesterday's gain. 
- This has sent the 21-day rolling correlation between the CSI300 and 2-year
swaps even deeper into negative territory at -0.22. This could be a sign that
declining expectations of more monetary easing are weighing on equities. It
could also suggest that the PBOC is favouring more prudent monetary policy over
supporting equity markets. 
- For now the yuan appears caught between weaker stocks and stronger rates, but
with US yields continuing to rise, China-US swaps remain under pressure, which
suggests USDCNH will remain on the front foot. 

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