The ASX200 has bounced 300 points off its intraday low (4928) as markets absorb the extreme volatility over the past week and look for clarity and confidence in Chinese markets. China’s PBOC moved on Tuesday night to rate cuts by 0.25% (one year lending rate to 4.6% and deposit rate to 1.75%) and the Required Reserve Ratio down 0.50%. There is a lot of discussion about whether or not the moves are part of a real structural problem in Chinese financial markets or whether it was just “the correction that needed to happen.” In credit markets the indices Both domestically and offshore) have tightened inline with equity markets but obviously because of the volatility the primary markets are effectively closed. The listed debt and hybrid market initially survived this rout but this week it experienced a very high level of selling as retail investors became spooked. The volatility in bank hybrid spreads presents some interesting opportunities in the shorter dated hybrids which sold off significantly. Our analysis found no particular reason for the selling other than retail investors that are not particularly well informed when it comes to trading margins and how pricing works in different parts of the capital structure.