HALISTER1: China Bonds in Favor as July Data Reaffirm Weaker Outlook: ANZ

China Bonds in Favor as July Data Reaffirm Weaker Outlook: ANZ

(Bloomberg) -- China economic data set to weaken further in 2H on industrial capacity cuts, favoring sovereign bond market, says David Qu, Shanghai-based markets economist at ANZ Bank China.
  • Weaker growth outlook and rise in corporate credit risks encourage flows to safe havens
  • Policy makers are unlikely to cut interest rates or RRR; PBOC says such stimulus is negative to yuan
  • ANZ forecasts full-year GDP growth of 6.5%
  • NOTE: July industrial output +6.0% y/y vs est. +6.2%; retail sales +10.2% vs est. +10.5%; fixed-asset investment +8.1% vs +8.9% est.
  • Yield on 2.74% govt bond due Aug. 2026 rises 2 bps to 2.710%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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David Qu (Australia & New Zealand Bank China Co Ltd)

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