MNI China Daily Summary: Wednesday, September 4

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MNI: PBOC Sets Yuan Parity Higher At 7.1148 Weds; +2.17% Y/Y

MNI: PBOC Net Drains CNY276.6 Bln via OMO Wednesday

CHINA PBOC CONDUCTS CNY0.7 BLN VIA 7-DAY REVERSE REPOS WEDS

MNI: US REDBOOK: AUG STORE SALES +5.2% V YR AGO MO

MNI: US JUL TRADE GAP -$78.8B VS JUN -$73.0B

MNI: CANADIAN JUL TRADE BALANCE CAD +0.7 BILLION

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US TSYS: Firmer Again, Labor Clues Keenly Watched

US TSYS
USGlobalBulletMarketsFixed Income BulletsRegionNorth America
  • Treasuries have pulled back a little away from highs but the general theme is one of a further but milder rally after yesterday’s sizable risk-off moves. The S&P 500 e-mini has tilted a little lower (-0.4%) after -2.1% for cash yesterday and industrial metals remain under pressure.  
  • TYZ4 trades at 114-06 (+ 06) off an earlier high of 114-09, which pushed through yesterday’s 114-07+ in a latest step closer to resistance at 114-19+ (Aug 21 high). Volumes are elevated at 370k.
  • Cash yields are 1-2.5bps lower, with the front-end leading declines today after lagging moves yesterday.
  • The bull steepening sees 2s10s lift to -1.9bps (+1.1bp) as it remains close to Friday’s latest high of +0.5bp and the +2bp seen briefly in global risk-off spillover the Monday after last month’s payrolls.
  • Ahead, the BoC is expected to cut 25bp for a third consecutive meeting at 0945ET (but with less scope for spillover being fully priced) before firmer focus on JOLTS shortly after and less so the Beige Book for any signs of additional labor market weakness.
  • Data: Weekly MBA mortgages (0700ET), Trade balance Jul (0830ET), JOLTS Jul (1000ET), Factory orders Jul (1000ET)  
  • Fed: Beige Book (1400ET)
  • Bill issuance: US Tsy to sell $60bn 17-week bills (1130ET)
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  • Treasuries have pulled back a little away from highs but the general theme is one of a further but milder rally after yesterday’s sizable risk-off moves. The S&P 500 e-mini has tilted a little lower (-0.4%) after -2.1% for cash yesterday and industrial metals remain under pressure.  
  • TYZ4 trades at 114-06 (+ 06) off an earlier high of 114-09, which pushed through yesterday’s 114-07+ in a latest step closer to resistance at 114-19+ (Aug 21 high). Volumes are elevated at 370k.
  • Cash yields are 1-2.5bps lower, with the front-end leading declines today after lagging moves yesterday.
  • The bull steepening sees 2s10s lift to -1.9bps (+1.1bp) as it remains close to Friday’s latest high of +0.5bp and the +2bp seen briefly in global risk-off spillover the Monday after last month’s payrolls.
  • Ahead, the BoC is expected to cut 25bp for a third consecutive meeting at 0945ET (but with less scope for spillover being fully priced) before firmer focus on JOLTS shortly after and less so the Beige Book for any signs of additional labor market weakness.
  • Data: Weekly MBA mortgages (0700ET), Trade balance Jul (0830ET), JOLTS Jul (1000ET), Factory orders Jul (1000ET)  
  • Fed: Beige Book (1400ET)
  • Bill issuance: US Tsy to sell $60bn 17-week bills (1130ET)