There is no doubt that reverse repurchase plus MLF will soon come to the central bank to increase liquidity.

category:Finance
 There is no doubt that reverse repurchase plus MLF will soon come to the central bank to increase liquidity.


Reverse repurchase additions

On August 12, the central bank restarted the open market reverse repurchase operation for 14 working days, marking the beginning of the liquidity launch season in mid-August.

On the 13th, the central banks counter-repurchase increase doubled in size compared with the previous operation. On that day, the central bank launched a 60 billion yuan reverse repurchase operation by means of interest rate bidding, with a period of 7 days and an interest rate of 2.55%. On the 12th, the central banks counter-repurchase operation was 30 billion yuan.

In mid-month, it was no surprise that the central bank restarted the open market operation, and the counter-repurchase operation was basically unexpected. The trigger behind this was the recurrence of tax period disturbances.

According to past experience, mid-month liquidity is vulnerable to tax period and other factors. The central bank usually carries out open market operations such as reverse repurchase to regulate liquidity margin surplus and smooth out currency market fluctuations. The deadline for tax (fee) declaration in August is 15 days. Usually, this day and one or two days are the peak period of tax payment or disturb short-term liquidity. In addition, a MLF expires this week, amounting to 383 billion yuan.

At the same time, since the end of July, market capital has not been very loose, the last two or three days have been slightly tense. The most intuitive manifestation is that money market interest rates have risen again. On the 13th, the repurchase rate of bonds in the inter-bank market rose across the board, with some maturities rising more significantly. Among them, the overnight repurchase rate of DR001 is about 5 basis points to 2.68%, the most representative seven-day repurchase rate of DR007 is 8 basis points to 2.74%, while the longer-term DR014, DR021, DR1M and DR2M are 18 basis points, 26 basis points, 23 basis points and 21 basis points respectively. Statistics show that in the past four trading days, DR001 and DR007 rose 46 basis points and 31 basis points respectively.

In this context, as the impact of tax period factors continues to show, the market capital supply and demand materials further tighten. In order to maintain a reasonable and sufficient liquidity, it is both reasonable and necessary for the central bank to give some liquidity support.

Next, it is expected that the central bank will use reverse repurchase and MLF operations comprehensively to influence the tax period and the expiration of MLF, and maintain the total liquidity at a reasonable level. The central bank counter-repurchase still has room to continue to add code, and in the face of the expiration of MLF on the 15th, there is little doubt that the central bank can carry out timely renewal, but it is a matter of quantity and quantity. Overall, it is unlikely that the monetary market will fluctuate substantially in August.

Policies have both strength and space

After the central bank concentrated liquidity investment, coupled with the impact of strong fiscal expenditure at the end of the quarter, liquidity was once very abundant at the end of June and early July, and short-term money market interest rates fell to historic lows. Subsequently, the central bank suspended open market operations for a long time, showing signs of recovery, and the total liquidity declined. Since the end of July, liquidity has generally maintained a balance between supply and demand, and capital is not tight but not very loose. The trend of capital prices is slightly abnormal compared with the end of the previous month and the beginning of the month. Industry insiders pointed out that the changes in the liquidity operation of the central bank left an impression that the market had maintained a firm policy. In addition, the second quarter monetary policy report continued to mention keeping the money supply the main gate, not flooding, and easing expectations had cooled down. However, in view of the latest changes in the economic and financial situation, monetary regulation has a certain strength in the short term and space in the medium term, and the follow-up is still easy to relax. China National Capital Corporations consolidation research team predicts that the subsequent decline in the growth rate of social financing balance is a big probability event, and monetary conditions still need to be relaxed. Peoples livelihood securities macro research team said that in the third quarter, the central bank or for small and medium-sized banks to implement a targeted reduction, with the global interest rate reduction continues to advance, Chinas monetary control is expected to increase ease. Source: Liable Editor of China Securities News: Yang Bin_NF4368

After the central bank concentrated liquidity investment, coupled with the impact of strong fiscal expenditure at the end of the quarter, liquidity was once very abundant at the end of June and early July, and short-term money market interest rates fell to historic lows. Subsequently, the central bank suspended open market operations for a long time, showing signs of recovery, and the total liquidity declined. Since the end of July, liquidity has generally maintained a balance between supply and demand, and capital is not tight but not very loose. The trend of capital prices is slightly abnormal compared with the end of the previous month and the beginning of the month.

Industry insiders pointed out that the changes in the liquidity operation of the central bank left an impression that the market had maintained a firm policy. In addition, the second quarter monetary policy report continued to mention keeping the money supply the main gate, not flooding, and easing expectations had cooled down. However, in view of the latest changes in the economic and financial situation, monetary regulation has a certain strength in the short term and space in the medium term, and the follow-up is still easy to relax.

China National Capital Corporations consolidation research team predicts that the subsequent decline in the growth rate of social financing balance is a big probability event, and monetary conditions still need to be relaxed. Peoples livelihood securities macro research team said that in the third quarter, the central bank or for small and medium-sized banks to implement a targeted reduction, with the global interest rate reduction continues to advance, Chinas monetary control is expected to increase ease.