MNI China Daily Summary: Friday, January 10

MNI BRIEF: China To Adopt Very Proactive Fiscal Policy-Offical

CANADA LIBERAL LEADERHIP VOTE TO REPLACE TRUDEAU SET FOR MAR 9

MNI BRIEF: PBOC Suspends Bonds Trades As Yields Drop

MNI: PBOC Net Drains CNY14.8 Bln via OMO Friday

MNI: PBOC Sets Yuan Parity Higher At 7.1891 Fri; -2.36% Y/Y

MNI: FRANCE NOV INDUSTRIAL PRODUCTION +0.2% M/M, -1.1% Y/Y

MNI: FRANCE NOV CONSUMER SPENDING +0.3% M/M, +0.3% Y/Y

MNI: NORWAY DEC CPI -0.1% M/M, +2.2% Y/Y

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

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GILTS: Weaker, But Yesterday's Cycle Extremes Are Untested

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

Gilts under pressure alongside global peers this morning before a recovery from worst levels in recent trade, yesterday’s lows untested across the curve.

  • A bid in oil adds to cross-market pressure.
  • Futures as low as 89.53 before a move back to 89.70, initial support at 89.00, bearish technical trend intact.
  • Yields little changed to 2.5bp higher, 10s under the most pressure.
  • 5s30s registered fresh cycle closing highs above 85bp yesterday, the July ’24 intraday high (87.5bp) presents the next upside target.
  • 10-Year spread to Bunds ~1.5bp wider at 225.5bp.
  • There doesn’t seem to be much of a bullish case for gilts in the very short term.
  • Fiscal risks and inflationary pressures continue to provide fundamental headwinds, while the reassessment of global term premia and issuance dynamics also weighing.
  • BoE Deputy Governor Breeden pushed back against the idea of intervention late Thursday, stressing that gilt moves have been orderly at this stage.
  • A reminder that we flagged a low likelihood of BoE intervention at this juncture ahead of Breeden’s comments, with relatively orderly markets one factor contributing to that view.
  • BoE-dated OIS shows 47bp of cuts through ’25 vs. 49bp late yesterday. The market briefly priced 39bp of cuts over that horizon on Thursday.
  • SONIA futures flat to -4.0, yesterday’s lows unchallenged.
  • U.S. NFP data headlines ahead of the weekend, with little of note on the UK schedule.
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Gilts under pressure alongside global peers this morning before a recovery from worst levels in recent trade, yesterday’s lows untested across the curve.

  • A bid in oil adds to cross-market pressure.
  • Futures as low as 89.53 before a move back to 89.70, initial support at 89.00, bearish technical trend intact.
  • Yields little changed to 2.5bp higher, 10s under the most pressure.
  • 5s30s registered fresh cycle closing highs above 85bp yesterday, the July ’24 intraday high (87.5bp) presents the next upside target.
  • 10-Year spread to Bunds ~1.5bp wider at 225.5bp.
  • There doesn’t seem to be much of a bullish case for gilts in the very short term.
  • Fiscal risks and inflationary pressures continue to provide fundamental headwinds, while the reassessment of global term premia and issuance dynamics also weighing.
  • BoE Deputy Governor Breeden pushed back against the idea of intervention late Thursday, stressing that gilt moves have been orderly at this stage.
  • A reminder that we flagged a low likelihood of BoE intervention at this juncture ahead of Breeden’s comments, with relatively orderly markets one factor contributing to that view.
  • BoE-dated OIS shows 47bp of cuts through ’25 vs. 49bp late yesterday. The market briefly priced 39bp of cuts over that horizon on Thursday.
  • SONIA futures flat to -4.0, yesterday’s lows unchallenged.
  • U.S. NFP data headlines ahead of the weekend, with little of note on the UK schedule.