China-Singapore Jingwei Client, January 15th, the central bank’s website announced on the 15th that in order to maintain a reasonable and sufficient liquidity in the banking system, the People’s Bank of China launched a 500 billion mid-term loan facility (MLF) operation on January 15, 2021 (including 1 The renewal of MLF expiration on 15th January and TMLF expiration on January 25th) and 2 billion yuan reverse repurchase operations.

Screenshot source: Central Bank website

　　The central bank’s website shows that the 500 billion yuan medium-term lending facility (MLF) winning interest rate is still 2.95% with a one-year period; the 2 billion yuan reverse repurchase winning rate is 2.20% and the period is 7 days.

　　Wind data shows that 5 billion yuan of reverse repurchase and 300 billion yuan of MLF expired in the central bank's open market today, and 240.5 billion yuan of TMLF expired on January 25.

　　Previously, data released by the central bank showed that at the end of December 2020, the balance of broad money (M2) was 218.68 trillion yuan, a year-on-year increase of 10.1%, and the growth rate was 0.6 percentage points lower than the end of the previous month and 1.4 percentage points higher than the same period last year; narrow money (M1) The balance of 62.56 trillion yuan, a year-on-year increase of 8.6%, the growth rate was 1.4 percentage points lower than the end of last month, and 4.2 percentage points higher than the same period last year; the balance of currency in circulation (M0) was 8.43 trillion yuan, an increase of 9.2% year-on-year.

The net cash input for the year was 712.5 billion yuan.

　　The deputy director of the CITIC Securities Research Institute and the chief FICC analyst clearly stated that the slight contraction in the operation volume indicates that the overall market liquidity is abundant and the central bank's monetary policy operations remain stable and neutral.

　　The China Securities Journal stated that compared with the subtle signals released by the recent high-frequency and low-volume reverse repurchase operations, the market is looking forward to further information about the central bank's liquidity control strategy before the Spring Festival from this MLF operation.

Analysts pointed out that the call for RRR cuts has recently risen, but the probability is relatively limited.

　　Jianghai Securities stated that the central bank is conducting MLF operations as scheduled, but the operation volume is less than 800 billion. In the short term, it does not prove that the central bank is trying to release a marginal tightening monetary policy signal. On the contrary, it may make the market expectation of RRR cuts or innovative monetary policy operations. Further strengthening and further boosting the market’s easing expectations will undoubtedly help the continuation of current market trading sentiment.

However, in the medium term, we need to be alert to the risk of a callback after the monetary easing expectations are fulfilled or falsified.

　　The CITIC Securities Mingming bond research team predicts that there will still be multiple MLF operations before the Spring Festival and the trend of net investment in the previous period will be maintained. In the short term, the monetary policy will likely remain neutral or loose, and the MLF interest rate will gradually play a role in the pricing of the treasury bond yield. Function, the 10-year Treasury bond yield will gradually move closer to the MLF interest rate. (Zhongxin Jingwei APP)