Yields Higher After Bumper PPI

The PBOC matched maturities with injections again today, the twenty fourth straight session of matching maturities, while the bank hasn't injected funds since February 25. The overnight repo rate is higher, last up 4bps at 1.7906% after opening just below 1.90%, the 7-day repo rate is 5bps higher at 2.00%, but still below the PBOC's 2.20% rate.

• Futures are proving resilient, initially dipping after inflation data, but have since recovered. 10-year last up 6 ticks at 97.22, while in the cash space yields are higher with the curve steepening.
• Inflation data was higher than consensus, CPI rose 0.4% compared to estimates of 0.3%, while PPI saw robust gains of 4.4% against estimates of 3.6%, the highest since July 2018. Commodity prices are cited as the main driver for PPI. SocGen points out that "Upstream price pressures persisted in March, from fuel, iron ores, copper to steel. Besides the general strength in global commodity prices, a recent announcement of production restrictions in Tangshan amid pollution/emission concerns have dampened the rise in iron ore prices but pushed up steel prices further." Government officials have noted the rise in commodity prices and said they will monitor the situation said Vice Premier Liu said after a financial stability meeting yesterday.