China onshore market: Rates update

Debt market

* The PBoC kept its 1Y and 5Y LPR rates unchanged at a respective 3.45% and 3.95%, in line with market expectations. * At the Lujiazui Forum on June 19, the PBoC’s Governor mentioned that trading on the secondary Treasury bond market would gradually be included in the central bank’s monetary policy toolkit. Investors believe this would help improve market liquidity and further reduce long-term rates on Chinese sovereign debt. * After the offshore RMB broke through the key 7.3 level on June 26, the Central Bank may decide to refrain from lowering rates in the near term. That said, the market broadly expects one or two rate cuts or a lowering of the banking RRR in 2H24.