China Bonds Weigh by Liquidity, Risk Appetite, Inflation: Citic
Source: BFW (Bloomberg First Word)
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(Bloomberg) -- Chinese bonds may continue to adjust lower near term as liquidity tightens and risk appetite picks up, Citic Securities fixed income research team writes in a note today.
Alert: HALISTER1- PBOC injected liquidity last week mainly through MLFs, boosting six-month and one-year funding cost to 2.85% and 3% respectively, higher than 10-yr govt bond yield at ~2.7%
- Risk appetite is buoyed by Shenzhen-Hong Kong stock link, boosting equity market; bond investors may wait for market correction in near term
- Domestic inflation may rise on lower base after August due to potential rise in oil prices as global production declines while food prices increase on El Nino
- Suggests investors stay cautious on bonds until direction of global oil prices and domestic inflation is clearer
- NOTE: Yield of 2.74% govt bond due Aug 2026 rises 2bps to 2.73%
- Yield of 2.65% July 2021 bond rises 2 bps to 2.55%
Source: BFW (Bloomberg First Word)
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UUID: 7947283