HALISTER1: PBOC’s Auctions Manage Liquidity, Rather Than Easing: Haitong

PBOC’s Auctions Manage Liquidity, Rather Than Easing: Haitong

(Bloomberg) -- PBOC’s resumption of 14-day reverse repo sales doesn’t signal monetary policy is tightening, and probably won’t impact bond yields, Haitong Securities bond analyst Jiang Chao writes in a note today.
  • PBOC’s funding is still cheaper than market price, as the 14-day reverse repo is sold at 2.4% in auction, unchanged from the last offer in Feb and lower than market rate at 2.7%
    • NOTE: PBOC injects 50b yuan through 14-day reverse repo at 2.4% and 90b yuan via 7-day repo at 2.25% yesterday. It will inject 80b yuan using 14-day reverse repo and 140b yuan via 7-day reverse repos today, according to two traders at primary dealers required to bid at the auctions
  • PBOC is expanding liquidity as it hasn’t issued new three- year central bank bills when the old bills matured recently: Jiang
  • Interest rate and RRR cuts are unlikely in near term, because the authorities are seeking to curb property bubble
    • CPI tends to rebound toward year-end on low-base effect and rising food, oil prices
    • Economic growth stabilizes in July and August, indicating no urgency for easing
  • Bond yields are unlikely to decline given PBOC didn’t lower repo rate in auction; 7-day repo rate has been the floor of benchmark 10-yr bond yield in the past 15 yrs
  • Bond yields are also unlikely to rebound significantly either; sees 10-yr yield to trade around 2.7% and fluctuate within 2.5%-2.9% in the next three months
    • Expects 10-yr govt bond yield to decline to ~2% in 2017
  • NOTE: Yield of 2.9% govt bond due May 2026 little changed at 2.76%
    • 7-day repo rate rose 10 bps to 2.4988% yday
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
600837 CH (Haitong Securities Co Ltd)
PBCZ CH (People's Bank Of China)

People
Jiang Chao (Haitong Securities Co Ltd)

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HALISTER1: Enbridge Income Fund - DBRS Rating Report

Enbridge Income Fund - DBRS Rating Report

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
ENF CN (Enbridge Income Fund Holdings Inc)

People
Eric Eng (DBRS Ltd)
Michael Rao (DBRS Ltd)

Topics
Fixed Income Research
Industry & Sector Research
Credit Analysis Research
Credit Research
Investment Research

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HALISTER1: DBRS: RBC Posts Strong Q3 Results Boosted by Growth across Most Sectors

DBRS: RBC Posts Strong Q3 Results Boosted by Growth across Most Sectors

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
RY CN (Royal Bank of Canada)

People
Michael Driscoll (DBRS Inc)

Topics
Earnings Review Research
Fixed Income Research
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Research Comments
Credit Analysis Research

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HALISTER1: DBRS: Bank of Montreal Reports Higher 3Q16 Linked Qtr. Results

DBRS: Bank of Montreal Reports Higher 3Q16 Linked Qtr. Results

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
BMO CN (Bank of Montreal)

People
Michael Driscoll (DBRS Inc)

Topics
Fixed Income Research
Reports
Research Comments
Credit Analysis Research
Credit Research

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(2) *TEVA PLUNGES AS MUCH AS 6% AFTER LOSING COPAXONE PATENT RULING

*TEVA PLUNGES AS MUCH AS 6% AFTER LOSING COPAXONE PATENT RULING

Alerts: HALISTER, HALISTER1
Source: BN (Bloomberg News)

Tickers
TEVA IT (Teva Pharmaceutical Industries Ltd)
2341014Z US (Amneal Pharmaceuticals LLC)
MYL US (Mylan NV)

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HALISTER1: Yellen May Be Short-Term Hawkish, ‘Low for Long’: Macquarie

Yellen May Be Short-Term Hawkish, ‘Low for Long’: Macquarie

(Bloomberg) --Fed Chair Janet Yellen could combine short-term hawkishness in her Jackson Hole speech this wk, with suggestion that rates will not rise much in current cycle, in Macquarie strategist Thierry Wizman writes in note.
  • Yellen could signal that while FOMC will raise policy rate in 2016, it is mindful that long-run real natural rate of interest is low, signaling a “low for long” rate outlook
    • “Could be satisfaction” for “hawks” in short term, “doves” in long term
  • Difficult for Yellen to obscure cumulative progress made by U.S. economy in recent mos.; “hawkish” short-term disposition will widen 2Y spreads between US and other developed mkts
    • EUR, CAD, JPY have been most sensitive to widening 2Y yield spreads; corresponding USD pairs probably offer best ways to buy USD if Yellen is hawkish
    • There’s room for probability of hike this yr to rise from current ~50% priced in by mkt
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Janet Yellen (Federal Reserve System)
Thierry Wizman (Macquarie Group Ltd)

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