MNI China Daily Summary: Wednesday, July 3

MNI BRIEF:BOJ Q1 Output Gap Hits 16th Negative Reading In Row

MNI: PBOC Sets Yuan Parity Higher At 7.1312 Weds; -0.34% Y/Y

MNI: PBOC Net Drains CNY248 Bln Via OMO Weds; Rates Unchanged

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS WEDS

CHINA SETS YUAN CENTRAL PARITY AT 7.1312 WEDS VS 7.1291

EZ/UK Bond Supply Calendar: Spain, France Auction on Thursday

PPI a Tenth Softer than Exp; Further NEIG HICP Disinflation to Come?

MNI: EUROZONE MAY PPI -0.2% M/M, -4.2% Y/Y

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MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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Weakness In Futures Doesn’t Go Beyond Friday’s Low

GILTS
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Gilt futures base at Friday’s lows (99.38), leaving the contract comfortably within its recent range, last -3 at 98.50.

  • The technical picture remains bullish, resistance at 99.25 & support at 98.21.
  • Yields are 1bp higher to 1bp lower, as the curve flattens.
  • 2s10s ~2bp flatter on the day at -11bp vs. recent ’24 highs of -5.5bp.
  • 5s30s ~1.5bp flatter on the day at ~64bp vs. recent multi-month highs of 68.2bp.
  • Gilt-centric discussions revolve around month-end matters, given projections for much larger than expected duration extensions.
  • Elsewhere, BoE focussed discussions continue to debate the relevance of last week’s “finely” balanced decision for some MPC members (more on that to follow).
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Gilt futures base at Friday’s lows (99.38), leaving the contract comfortably within its recent range, last -3 at 98.50.

  • The technical picture remains bullish, resistance at 99.25 & support at 98.21.
  • Yields are 1bp higher to 1bp lower, as the curve flattens.
  • 2s10s ~2bp flatter on the day at -11bp vs. recent ’24 highs of -5.5bp.
  • 5s30s ~1.5bp flatter on the day at ~64bp vs. recent multi-month highs of 68.2bp.
  • Gilt-centric discussions revolve around month-end matters, given projections for much larger than expected duration extensions.
  • Elsewhere, BoE focussed discussions continue to debate the relevance of last week’s “finely” balanced decision for some MPC members (more on that to follow).