VIEW: Friday saw Societe Generale.......>

CHINA RATES: VIEW: Friday saw Societe Generale recommend a long 10-Year CGB

position targeting 2.30%, with a stop at 2.75%. They noted that "concerns about

rising bond supply has weighed on the CGB market especially ahead of the NPC.

The NPC disclosed the long-waited special CGB and LGB issuance quotas of

CNY1.0tn and CNY3.75tn, respectively. While special LGB issuance is in line with

the market, special CGB issuance turns out to be the low end of market

expectation. Dropping out the growth target for 2020 may also suggest that no

sizable additional bond supply will be necessary. In this regard, the

uncertainty surrounding bond supply for the remainder of this year decreases

significantly. The size of bond supply is still quite heavy but the risk reward

in the medium term is more favourable to long bond positions. The CGB curve is

the second steepest curve in Asia. Any additional monetary easing, including

liquidity injection, would more beneficial for the belly and long end as the

front-end has already front-loaded the scope of further monetary easing."