China Bond Update

New regulations continue bulldozing through. This time allowing banks to hold more USDCNY net open positions overnight that will improve the spot fx market liquidity. In addition, foreign loans will have no limits which means excess USD can be sold off.

Meanwhile we saw a technical default out of Kaisa on New Year’s day which failed to stem another euphoric new 3 year high in the HSCEI Index  as bets on more PBOC stimulus increased.

Looks like USDCNH is headed to 6.25 soon at this rate.

usdcnh weekly

Leaving with the indicative bond prices.