MNI EXCLUSIVE: Former PBoC Official On China Growth Outlook

ACGBs (YM -2.0 & XM -2.0) are slightly cheaper after trading in a narrow range in today's Sydney session.   

• Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s directionless session. Focus turns to today’s CPI inflation data for December where rental inflation is expected to accelerate to an average figure that firmly rounds to 0.3% M/M in December.
• Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at -14bps.
• Swap rates are 2-3bps higher.
• The bills strip flat to -1 across contracts.
• RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is fully priced for April (101%) now, with the probability of a February cut at 68% (based on an effective cash rate of 4.34%).
• Today, the local calendar is empty.
• Expectations of strong pricing at auctions were confirmed, with the latest ACGB Dec-34 supply achieving a weighted average yield that printed 0.70bp through prevailing mids (per Yieldbroker). The cover ratio also improved, rising to 2.8875x from 2.8375x. 
• AOFM Bond issuance will issue A$700mn of the 2.75% 21 November 2027 bond on Friday. 

• China & Hong Kong equities are opening slightly lower in morning trade, although ranges are narrow. The Hang Seng is -0.30%, while CSI 300 is -0.40% with Tech & Healthcare sectors struggling the most.
• Chinese regulators plan to implement measures, including a swap facility and refinancing facility introduced by the PBOC, to stabilize the stock market. These tools are expected to inject approximately ¥400bi into the A-share market in 2025, according to strategists from CICC and CITIC Securities.
• Country Garden reported a record loss of ¥178.4b ($24.3b) amid China’s prolonged housing crisis, driven by impairments, declining margins, and weak sales. While its first-half 2024 loss narrowed to ¥12.8b, the developer faces mounting debt of ¥250b and ongoing challenges in its restructuring efforts, with a key wind-up petition hearing set for January 20. Shares remain suspended, having lost 97% of their value since 2018. Property Indices are underperforming the wider market this morning, with the Mainland Property Index -1.25%, while BBG China Property Developer Index is -0.90%.
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China’s M2 money supply reached CNY313.5 trillion in December, up 7.3% y/y, driven by the migration of government deposits and wealth management funds to resident and corporate deposits, according to Mingming, chief economist at CITIC Securities. Looking ahead, new credit and social financing are expected to increase y/y as authorities adopt a moderately easing monetary policy and guide financial institutions to increase credit supply, said Wang Qing, chief macro analyst at Orient Securities. (Source: Securities Daily)