A People’s Daily report and social media posts point to a potential China reopening. And have sent USDCNH lower and CGB  yields and FX swaps turn higher this morning as investors chase that flickering light at the end of the Covid zero tunnel.

Oil prices are getting a bounce on the news as traders ultimately think of China more as a driver of upside to demand at some point next year when the reopening of the economy accelerates rather than as a current incremental driver of demand weakness. In other words, the light at the end of the Covid zero tunnel is more attractive than today’s gloomy outlook.

Asia stocks are climbing on the reopening headlines as investors speculate that  China will pivot from covid zero well before the Federal Reserve pivot. While it’s not precisely the media blitz we were looking for, the People Daily carries much weight in local media circles.
Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT