Summarise in 200 characters:

US Treasuries reversed more than half of the rally that took place during the first 2 trading sessions of the week. CT10s closed at 4.95% 14.5bps cheaper than the overnight low yield. The selloff in the back end started during the overnight session, with the bear steepening move picking up pace after much higher than expected new home sales data +12.3% vs +.7% expected. The market made intra-day lows after today’s weak 5yr note auction which tailed +.9bps and dealers taking 19.4% vs 12% avg of the last 5 auctions. Volumes and client activity came to a halt post 3pm. During the session market saw RM selling 2s, 5s, and 20s. More Tier 1 data tomorrow, overall our view hasn’t changed to sell rallies and enter into steepeners on any flattening moves. 

In China IG, a lot of headlines from China and Hong Kong since last night as China to increase their fiscal deficit ratio and Hong Kong to ease property purchase rules. China stimulus more relevant for consumption and infrastructure, and therefore understandably market reaction was lacklustre. China property is +/-1pt with performing names still under pressure. PINGRE is about 50c higher on day though that is more driven by flows. HG side were 2-3bps tighter while AMCs 25-75c higher. Moody’s affirms China Life Overseas IFSR at A1, changes outlook to stable from negative. Ping An Insurance contemplates bolstering Ping An Real Estate with RMB30b financial support; plan under internal review, subject to change, approval. 

In China HY, constructive session with multiple positive headlines regarding the economy coming out on both China and Hong Kong side. Overall market opened 0.5-1pt higher in performing sectors such as Macau with better buying from HFs and RMs before finishing the session on two-way flows as equities were faded, generally remaining firm with some profit taking. China property continues to trade on a diverging tone with weak names continue to trend weaker while market is finding a bid in some specific situations like LNGFOR and GEMDAL, overall -0.5pts to +1pts. 

In Sovereigns, better buying and a preference for duration across both the sovs & the quasi for the first time in a while. INDON/PHIL 0.25-0.625pt higher on the day (+/-2bp). Frontiers, SRILAN trading in good volumes and ~0.5-1pt higher on the day while MONGOL is quieter and marked ~25c higher. In Indian IG, firmer tone with better buying interest seen across PSU corps and oil producers (banks and private sector corps saw balanced two-way flows). Buying was mostly led by real money, followed up by Street lifting the higher quality names on the screens towards close. Spreads were 2-4 bps tighter on the day. Non-China HY continues to lag the rally seen in both DM and EM but sentiment does improve with 2-way flows. The stabilization in rates and equity did lure back some interests to add risks while there were still some ongoing outflows. 2-way traded with levels +0.25-0.5pt. Active in AZUPOE with 2 ways traded at unchanged level while rest renewable +0.25-0.375pt. Airport names +0.25pt with some INAPIN going through. Also traded some size of SHFLIN at unchanged level. ADSEZ and VEDLN were mostly unchanged in light flows.

AT1s closed the day a marginally lower, as the early strength of the market was undermined by continued weakness in government bonds. DB was the only material outperformer, up 20c after good Q3 results. SEB, LLOYDS and SANTAN results were non-events for credit. Volumes were muted in the morning session but picked up in the afternoon as sellers started to emerge. Active names include SOCGEN, BNP, HSBC, BACR, DANBNK, UBS, VMUKLN and BNS.