2014-01-23

PBOC Pumps Again in Same Week

Earlier in the week, the PBOC pumped 255 billion yuan into the banking system. (See PBOC Intervenes to Halt Rate Increase in Advance of Holiday)

The PBOC upped the amount today by 120 billion. 央行本周为春节量身打造3000亿逆回购
The reverse repo is 21 days, in order to expand the interest rate tender, the successful rate of 4.7%. Count of 180 billion yuan on Tuesday, this week launched a total of 300 billion yuan reverse repo operations 21 days period.

Market participants said the central bank is so generous successive reverse repo really rare, and the total amount within 3 days of almost 375 billion yuan a near-record, while the highest is in the February 5, 2013, the central bank open market operations carried out in two of a total of 450 billion yuan reverse repo operations, and within a single day. Thus, it is sufficient to stabilize during the Spring Festival to see the central bank liquidity squeeze determination.
Spring Festival was in February last year.

February 2013: Inject ¥450 billion in one day (Spring Festival related)
June 2013: Inject ¥300 billion in one month
September 2013: Inject ¥290 billion in one day
December 2013: Inject ¥300 billion over three days
January 2014: Inject ¥255 billion in one day ¥375 in one week (Spring Festival related)

Full article from above, Google Translated:
January 23, following the central bank in January 21 days the amount of drain 255 billion yuan, the central bank in the open market on Thursday launched a 21 days period of reverse repurchase and continue to drain 120 billion yuan, within three days of the total amount of reverse repurchase up to 375 billion yuan.

The reverse repo is 21 days, in order to expand the interest rate tender, the successful rate of 4.7%. Count of 180 billion yuan on Tuesday, this week launched a total of 300 billion yuan reverse repo operations 21 days period.

Market participants said the central bank is so generous successive reverse repo really rare, and the total amount within 3 days of almost 375 billion yuan a near-record, while the highest is in the February 5, 2013, the central bank open market operations carried out in two of a total of 450 billion yuan reverse repo operations, and within a single day. Thus, it is sufficient to stabilize during the Spring Festival to see the central bank liquidity squeeze determination.


Although the central bank in January 21 on invested 255 billion yuan of funds to the market, the same day shibor interest rates go down, but in between the 23rd Shanghai Bank Offered Rate data show that the trend of each species differentiation period, short-term varieties remained stable, but some of the long-term upward trend remains varieties, January varieties are showing a downward trend.

It is worth noting that these two species have emerged in the operation of the reverse repurchase 21 days fewer appear, dates back to 2005, the last time the central bank reverse repo operations before the Spring Festival. Similar to 2005, the central bank also on Tuesday and Thursday before the Spring Festival were conducted 21-day reverse repurchase operations, however, the central bank's reverse repo amount compared to 2005 were carried out by 12 billion yuan and 160 billion, almost doubled in the amount of 10 times.

Since 21 days reverse repo can complete across the Spring Festival holiday, and Tuesday and Thursday can declare demand for institutions to provide a choice to help ease the supply and demand cross-section of funds, to prevent the emergence of short-term capital side volatility. Analysts believe that 21 days of reverse repo operations are designed specifically for the Chinese New Year, "tailor-made", which is to stabilize the interbank market interest rates have a certain effect.

According to Shanghai interbank offered rate data, which, on the 23rd largest increase varieties shibor 14 days, up 38BP to 5.94%. After 21 days since the amount of drain 255 billion yuan the central bank, which breed in the 21, 22 daily to maintain steady trend, however, although the central bank once again turn on the water 23, 120 billion yuan, also failed to suppress the rise of the species live.

Analysts believe that, although the central bank reverse repo flagship species just 21 days to Chinese New Year holidays included, but 23, 14 days shibor than other varieties or description is still a large demand for liquidity during the Spring Festival, but also shows that with the Spring Festival approaching, the demand continues to increase liquidity, the central bank in the 21st and the 23rd consecutive reverse repo also failed to fully meet the market.

And overnight, seven days varieties trend remained stable. Among them, 23, rose to 2.4% overnight varieties, 7 days varieties rose 6.9%, while the figure from the historical trend of the species, in addition to the 20-day jump a hundred points, the central bank since the 21 days the amount of drain 255 billion yuan, which two species have remained stable.

In addition, although a month varieties still high interest rates, but the trend has been a downward trend. 23, January varieties rate fell to 6.7% 24BP. Relative to the 20th, the species has declined more than 7 percent interest a lot.

Ultra-scale reverse repurchase fueling asset price

The central bank has a number of large-scale reverse repurchase exceeded expectations of market participants, and the resulting positive financial side also contributed to the bond market asset prices, particularly in interest rate debt, credit debt, debt represented.

Shanghai Securities Hu Yuexiao this view, "the reverse repo scale far higher than market expectations, and 21 days of reverse repurchase just cover the Spring Festival holiday, released by the central bank liquidity-than-expected impact of large-scale, institutional funds face on New Year's significant improvement in confidence, the overall funds face further pick up yesterday. "

In the central super-scale reverse repurchase put liquidity driven by bond market asset prices continue to rebound.

A Southern a bank, told reporters that "two consecutive reverse repurchase a total of 375 billion yuan is definitely exceeded market expectations, the bond market also rose this morning turned Although 21 days reverse repo is mainly in response to the Spring Festival temporary varieties, but such a huge amount of reverse repurchase a greater stimulus to the market, the central bank so distributed New Year red envelopes will make money before the holiday hassle-free. "

As the central bank to carry out a huge amount of reverse repurchase the market liquidity has been significantly improved, 22, a market interest rate debt significantly warmer. Hu month that "in the face of the release of funds under the background of positive signals, the interest rate yields gained significant support."

Similarly, by the favorable impact of the financial side as well as credit debt, bond futures and derivatives. As the central bank's funds face shot stable before the holiday, the total invested 375 billion yuan of liquidity, bond futures prices also rebounded strongly. Hu month analysts believe that "with the central bank shot, bond futures bearish trend is expected to be reversed."

A futures analyst for 21st Century Network reporter said, "As the central bank through open market operations, the market continued to release the 375 billion yuan of liquidity on the term debt market has played a significant role in boosting such futures prices opened higher in early trading go, and broke the previous low volatility in the 91-92 million range pattern is expected to remain strong bond futures market trend in the short term. "

In addition, the stock market, there have been more substantial rebound in the 22nd CSI 300 Index rose 2.58 percent. In the case of the central bank to release liquidity, most interest-based exchange-traded products also rose on the specific variety, which TEDA Manulife poly B or up 4.66 percent, Wells Fargo rose 1.06% GEM A, Peng Hua resources A rise 0.86 percent. 23, although the Shanghai Composite Index and Shenzhen Component Index slight pullback, but trading was more active, more than 50 cities stocks daily limit, the GEM index rose 2.08 percent.

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