Will Last Week’s Interest Rate Reversal Bring an End to Tightening Policy?
June 5, 2017
5Y corporate bond yields exceeded the PBOC’s 5Y benchmark rate for the first time in nine years, making it is cheaper for Chinese corporations to borrow from banks than to issue bonds. Officials are less than thrilled with the development. It bodes poorly for their ongoing campaign to reduce bank lending.
Also making headlines, China’s offshore RMB spiked unexpectedly on Thursday night, appreciating more than 1% against the USD. We discuss several explanations for the move in the attached note. Rounding out the week, China and the European Union reiterated their joint commitment to climate change abatement and free trade, and China’s regulators announced new restrictions on shareholding insiders to minimize improper dealing.
Topics covered: Rate Curve Reversal, CND, EU-China Summit, Securities Regulatory Reform
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