China-Singapore Jingwei Client on March 17th According to the official website of the Central Bank, on the 17th, the Central Bank issued an announcement saying that there will be no reverse repurchase operation on March 17 , 2020. On the same day, the open market achieved zero delivery and zero return. So far, the central bank has suspended reverse repurchase operations for 21 consecutive business days.
Source: Central Bank's official website
On the 17th, the central bank announced that the total liquidity of the banking system is currently at a reasonable and sufficient level, and no reverse repurchase operation will be carried out on March 17, 2020.
Source: China Foreign Exchange Trading Center
On the 17th, the central parity of RMB against the US dollar was reported at 7.0094 yuan, down 76 basis points from 7.0018 yuan on the previous trading day (March 16).
Source: Central Bank's official website
The Sino-Singapore Jingwei client combed and found that the last time the central bank implemented reverse repurchase operations was on February 17, when the central bank said that in order to hedge the impact of the central bank's reverse repurchase expiration and other factors, it is reasonable to maintain sufficient liquidity in the banking system. On February 17, the People's Bank of China launched a 200 billion yuan medium-term loan facility (MLF) operation and a 100 billion yuan 7-day reverse repurchase operation. So far, the central bank has suspended reverse repurchase operations for 21 consecutive business days.
Although the central bank did not carry out reverse repurchase operations for many consecutive days, on March 16th, the central bank implemented a targeted RRR cut and released long-term funds of 550 billion yuan. At the same time, the Bank launched a medium-term loan facility (MLF) operation of 100 billion yuan. It is worth noting that the MLF bid interest rate is still 3.15%, which is the same as the previous interest rate.
CITIC Gushen clearly stated that this time the MLF has not cut interest rates, the market will play a game of LPR on March 20 in the short term, and market sentiment may continue to be stuck under the short-term monetary policy, and the market may be in a volatile market. Changes, there may still be the possibility of OMO interest rate cuts, overall RRR cuts, and even deposit rate adjustments. In general, we believe the 10-year Treasury bond maturity yield will enter the 2.4% -2.6% range.
Everbright Securities believes that the MLF interest rate has not fallen, which does not hinder the decline of LPR. First, the proportion of MLF (and TMLF) in the funding source of the banking system is very low and does not affect the overall situation. Secondly, the targeted reduction by the central bank saved about 8.5 billion yuan in capital costs for banks. In addition to the 15 billion yuan saved in January this year, the direct cost savings were roughly 23.5 billion yuan. Third, since March, the financing rates of banks in the money market and bond market have been significantly lower than at the beginning of February and February. If commercial banks can transmit these policy dividends to the downstream without reservation, both LPR and actual loan interest rates can fall by a notable margin. (Zhongxin Jingwei APP)