China-Singapore Jingwei client, June 24, according to the Central Bank’s website on the 24th, the Central Bank announced that in order to maintain stable liquidity at the end of the six months, the People’s Bank of China launched a 180 billion yuan 7-day reversal through interest rate tendering on June 24, 2020. Repurchase operation; the winning bid rate is 2.20%, the same as last time. Due to the expiry of today's non-reversible repurchase, a net investment of 180 billion yuan was achieved on that day.
Screenshot source: Central Bank website
According to statistics, the central bank has carried out a total of 500 billion yuan of reverse repurchase operations this week. On June 25 and June 26, a total of 120 billion yuan of reverse repurchase expires, due to the Dragon Boat Festival will be postponed to June 28.
On the 23rd, Shibor was mostly up, overnight varieties were down 16.2bp reported at 1.9710%, 7-day period was unchanged from the daily report at 2.15%, 14-day period was up 21.4bp at 2.4190%, and 1-month period was up 2.3bp at 2.08%.
On the 24th, treasury bond futures opened higher, with the 10-year main contract up 0.16%, the 5-year main contract up 0.17%, and the 2-year main contract up 0.11%.
From the 18th to the 24th, the central bank has carried out over 100 billion yuan reverse repurchase operations for five consecutive days. Huatai Securities said it expects subsequent reverse repurchase operations to continue to normalize. The advantage of open market operations is that it is "reversible" and can be used for multiple maturities to smooth out the fluctuations in funds brought about by the issuance of interest rate bonds. With the acceleration of the resumption of production, a large number of infrastructure projects are expected to be put into operation quickly, and the allocation of financial funds will be faster and faster in the next few months. In this context, flexible reverse repurchase is more suitable for short-term liquidity adjustment. Considering the large supply of government bonds and local bonds in the second half of the year, it is expected that reverse repo operations will be more frequent in the future.
Zhou Guannan, chief analyst of Huachuang Securities' solid income, pointed out that considering the short-term liquidity requirements brought by the continued payment of government bonds in the second half of the year, if the central bank reverses the repurchase operation and is not normalized, the probability of funds will continue to be in a tight balance. The market Fund prices may fluctuate around the policy interest rate hub. In the case of changes in the liquidity delivery structure of the central bank, the price of funds may remain volatile near the policy rate in the second half of the year. The fluctuation of funds depends on the timeliness of reverse repurchase operations, government bond payments continue, and normalized reverse repurchase operations are the key to maintaining the stability of funds.
Earlier, on June 18, Central Bank Governor Yi Gang stated at the Lujiazui Forum that the financial support policies during the epidemic response are phased. It is necessary to pay attention to policy design to encourage integration, prevent moral hazard, and pay attention to policy sequelae. Be modest and consider the timely exit of policy tools in advance. Looking forward to the second half of the year, monetary policy will also maintain reasonable and sufficient liquidity. It is expected that the annual RMB loans will increase by nearly 20 trillion yuan, and the scale of social financing will increase by more than 30 trillion yuan. (Sino-Singapore Jingwei APP)