China-Singapore Jingwei reported on December 28 that the Central Bank announced that in order to maintain stable liquidity at the end of the year, the People's Bank of China launched a 200 billion yuan reverse repurchase operation on December 28, 2021 through an interest rate bidding method.

Wind data shows that today's 10 billion yuan reverse repurchase expires, so a net investment of 190 billion yuan that day.

Screenshot of the central bank website

　　Wind data shows that this week, the central bank's open market will have 50 billion yuan of reverse repurchase maturity, of which 10 billion yuan will expire from Monday to Friday; in addition, there will be 70 billion yuan of treasury cash deposit maturity on Wednesday.

　　The People's Bank of China work conference will be held in 2022.

The meeting requested that the prudent monetary policy in 2022 should be flexible and moderate.

Comprehensive use of a variety of monetary policy tools to maintain reasonable and abundant liquidity, enhance the stability of the growth of total credit, increase support for the real economy, and maintain the growth rate of money supply and social financing scale to basically match the growth rate of the nominal economy.

Improve the market-based interest rate formation and transmission mechanism, promote the steady and slow decline of the comprehensive financing costs of enterprises, and the financial system to continue to transfer profits to the real economy.

Strengthen the flexibility of the RMB exchange rate and keep the RMB exchange rate basically stable at a reasonable and equilibrium level.

　　The central bank’s Monetary Policy Committee held its fourth quarter 2021 regular meeting on the 24th pointed out that it is necessary to take the lead, seek progress while maintaining stability, increase cross-cyclical adjustments, combine counter-cyclical adjustments, and make overall plans for the convergence of macroeconomic policies for the next two years. Support high-quality economic development.

A prudent monetary policy should be flexible and appropriate, strengthen forward-looking, precise, and autonomous, and give full play to the dual functions of the total and structure of monetary policy tools; Monetary policy tools that directly reach the real economy are converted into market-oriented policy tools that support inclusive small and micro enterprises and individual industrial and commercial households.

　　Zhou Junzhi, chief macro analyst at Minsheng Securities, believes that the central bank's statement at this regular meeting "promote the reduction of corporate comprehensive financing costs."

The reduction in financing costs cannot be achieved by reducing the 1-year LPR alone. It requires the interest rate center of the financial system to be lowered, that is, the policy interest rate needs to be lowered by different degrees.

Lowering the interest rate center is the first direction of this round of monetary easing.

The central bank's statement of "more proactive and promising" monetary policy means that the currency will be further loosened in the future.

There are two ways of easing. One is the easing of traditional aggregate tools such as interest rate cuts and RRR cuts; the other is the continuous use of structural monetary policy tools.

　　Essence Securities believes that the policy signals of the regular meeting of the Monetary Policy Committee in the fourth quarter are positive. In the first half of next year, under the situation of greater downward pressure on the economy, there is a possibility of further easing of monetary policy.

The recent easing expectations of monetary policy have supported the bond market, while fiscal power, increased credit availability, and improved economic expectations have had a negative impact on the market. These factors intertwined and caused the bond market to turn into turbulence.

Changes in credit data early next year may break this pattern.

　　In the bond market, Huatai Securities believes that in the next three months, there is a high probability that bonds will still oscillate in the range of top and bottom.

Regarding the shape of the curve, we believe that the short-term direction is unclear, but with the passage of time, the curve may become steeper, but the space is limited.

Credit spreads are unlikely to widen significantly in the short term, and remain flat.

(Zhongxin Jingwei APP)

(The opinions in the article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)