China-Singapore Jingwei Client, December 15th, announced on the official website of the Central Bank that in order to maintain a reasonable and sufficient liquidity in the banking system, the People’s Bank of China launched a 950 billion mid-term loan facility (MLF) operation on December 15, 2020 (including the On the 16th, the two renewal of MLF due) and the 10 billion yuan reverse repurchase operation fully met the needs of financial institutions.
The winning bid rate was 2.95%, the same as before. A total of 600 billion MLF expired in December.
Screenshot source: Central Bank website
By convention, the central bank will carry out the Mid-term Lending Facility (MLF) operation on the 15th of each month.
Public data shows that the 950 billion MLF is the largest operation this year.
Wind data shows that the central bank’s open market this week (December 14th to December 18th) totaled 450 billion reverse repurchase and MLF maturity, of which the reverse repurchase maturity scale from Monday to Friday was 50 billion and 60 billion respectively. , 20 billion, 10 billion and 10 billion yuan, another 300 billion yuan MLF expires on Wednesday.
The research report of Everbright Securities on December 13 pointed out that the central bank will carry out mid-term MLF operations on December 15 (including one-time renewal of the two MLF expirations on December 7 and 16), and the specific operation amount will be based on market demand, etc. The situation is determined. Since the central bank has already conducted an MLF operation at the end of November, this operation needs to focus on judging the central bank's attitude towards future market liquidity and capital prices.
According to a research report of China Securities Investment Corporation on December 14th, in terms of funding, taking into account the central bank’s MLF release on November 30 to release its intention to maintain stability, it is unlikely that funding will be significantly tightened in the short term.
This week (December 7th to December 11th) open market operations are net withdrawn. Next week (December 14th to December 18th) 300 billion MLF will expire. The central bank has announced that MLF will be launched next week. However, the scale still needs attention.
Combined with the funding requirements for the new year, the funding is expected to remain tightly balanced, and it will not be excessively tightened or excessively abundant.
Guosen Securities released the "Special Report on Fixed Income: How Liquidity Is at the Year-end of the Year" on December 14, showing that according to the data of the past 16 years, liquidity in December is prone to seasonal tightening, and it is mainly reflected in the long-term liquidity (R007) Demand.
After the end of the year, the funding interest rate usually declines rapidly in the first half of January.
Guosen Securities pointed out in the above report that as monetary policy gradually shifted to interest rate regulation, the liquidity volatility of the inter-bank money market at the end of the year (including December and the Spring Festival) was significantly weakened. Funds were very stable around the Spring Festival in 2016, 2017, 2018 and 2019. (Zhongxin Jingwei APP)