Capital Emergency, Central Bank Interrupted Net Return

The open market will release 780 billion of funds in June.

The unexpected financial strain that started in mid May disrupted the central bank's two month net return process.

This month, the open market has invested 224 billion yuan into the market.

And after entering June, the open market will once again usher in the peak of huge capital release. About 780 billion yuan of funds will continue to "lift the ban" or cool the price of money market funds with high fever.

Yesterday, the central bank issued only 5 billion yuan and three months' central bank bills in the open market.

So far this month, the central bank has released 389 billion yuan of funds from the open market, and the volume of withdrawal has rapidly dropped to 1/3 last month, after the Spring Festival of February.

Due to a sharp decline in the volume of return, the open market has injected 224 billion yuan into the market this month.

Prior to that, the open market for two consecutive months from the market net return of more than 1 trillion yuan.

Since mid May, the sudden tightening of capital is the main reason for the open market's initiative to release liquidity to the market.

Since the third reserve rate was raised in the year, the supply of loose money market funds has tightened day by day, and the price of funds has been rising sharply for two consecutive weeks.

In order to ease the tight liquidity, the open market return of funds to 35 billion yuan this week, a single week in the year to recover the amount of funds, net investment of 145 billion yuan, accounting for 2/3 of the month's funds released.

Although the open market has already released liquidity quickly in the short term, it has not yet stopped the price level of "advancing vigorously".

Yesterday, the overnight repo rate rose by 14 basis points to 2.27%, after the Spring Festival this year.

Since the third reserve rate was raised in the year, it has risen 76 basis points in just three weeks.

As the current market capital cost has gone beyond the short-term bond interest rate, the short-term bond yields rose below one year and the rate of central ticket rose to 2.08% a year.

Industry analysts believe that the end of the month will continue to exacerbate the shortage of funds.

However, money market capital prices will not continue to rise.

Because, after entering June, the amount of funds lifted in the open market will reach 780 billion yuan, of which, the amount of funds expended next week will reach 144 billion yuan.

The open market has ample room to cool the price of money in the money market.

At the same time, it is noteworthy that the liquidity tensions currently emerging in the banking system are still structural rather than global.

The third increase in the reserve ratio this year has indeed reduced the stock of market funds, but it is also the main reason for various institutions to withdraw funds from the money market and buy medium and long-term bonds.

From the recent market situation, despite the tight capital market, the yield of long bond issuance is still lower than expected, while large banks continue to buy bonds in the market.

Therefore, if we want to cool the money market in the short term, we need not only to increase liquidity but also to reduce the supply of long end bonds.

From this point of view, the issuance of central bank tickets next Wednesday may be an important observation point.

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Market expects central bank to continue to invest funds

The central bank conducted the last open market operation in May on the 27 day.

As the day only issued 5 billion yuan March central bank votes, the open market therefore ushered in the second week May net throw.

According to statistics, the central bank invested a total of 224 billion yuan into the market in May.

Analysts said that in the context of "drought" still no relief, the central bank may choose to continue to invest in the market.

Open market return

The central bank issued the forty-fourth central bank bill in 2010 on May 27th (May 27th) by price bidding.

The results of the issue show that the issue volume of central bank in March was 5 billion yuan, and the final issuing interest rate was 1.4896%, up 4.04 basis points from last week.

Since the middle of 5 months, banks have suddenly become nervous and short-term interest rates have been rising, forcing the issuance rate of central bank bills in March to rise by 8.08 basis points.

According to statistics, the total amount of funds expended in the open market this week amounted to 180 billion yuan. After deducting the circulation of 35 billion yuan central bank votes and 1 yuan central banks in March, the total net capital invested was 145 billion yuan.

From the open market operation in May, the central bank achieved a net return of 22 billion yuan in the first 4 weeks of the week, a net investment of 152 billion yuan in the second week, 51 billion yuan in the third week, and 145 billion yuan in the fourth week of May.

In May, the central bank invested a total of 224 billion yuan in the market, ending the monthly net return of two consecutive months in March and April.

Analysts say the re emergence of monthly net launch scenarios may indicate that the central bank's open market operation has changed earlier.

In the interest rate of the central bank, except for the 8.08 base points of the issuance rate of the central issue in March, the interest rate of the 3 - year central bank continued to decline this month.

At this time, the central bank's interest rate has dropped to 2.70% from 2.75% when the issue was restarted.

Analysts said that the interest rate of the central bank and the 3 - year central bank in March will still be "one rise, one drop".

Scale down or trend

Since the central bank's monetary tightening measures have been accumulating this year, the interbank market lending rate has risen sharply since the middle of 5 months, and even the former funds have been mixed up.

Against this background, some market participants said that in view of the current tight capital market, short term demand for the central bank market, and the large amount of funds expired in the open market in June, the future open market will be dominated by net investment, and the volume of central bank and repo will also be greatly reduced.

A trader in a local brokerage firm in Shanghai said, "the fact that the bank is busy borrowing money is obviously an abnormal state. The central bank must reverse the market situation next."

The person also said that, according to the experience of the open market operation in previous years, the annual central bank will generally reduce the operation of the open market in an appropriate way, and there will be a small amount of net capital investment in normal circumstances in 5 and June.

According to the data released by the central bank, China's foreign exchange accounted for 286 billion 300 million yuan in April, far below the expected 400 billion yuan.

There is a market view that in the remaining years of the year, China's foreign exchange reserves are hard to see explosive growth, and the corresponding base money will be greatly reduced.

In this regard, Societe Generale Bank (601166) economist Lu commissar said that due to the current legal reserve requirement is at a historical high level, there is a big reduction in the necessary circumstances.

In the short term, the amount of the open market in June alone is 780 billion yuan. As long as the central bank relaxes the strength of withdrawal, the tight liquidity will be eased.

Against this background, the central bank may alleviate the current market liquidity tension by reducing the 3 year central bank's issuing interest rate and maintaining the 1 year central bank's issuing interest rate.

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Experts say yesterday's stock market has responded positively to this.

After winning the winning bid for the 3 month central bank last week, this week rose another 4.04 basis points, and the 1 - year central bank interest rate on Tuesday remained unchanged.

According to the market consensus, in the next period of time, when monetary policy continues to maintain stability, it will strengthen short-term liquidity management and adjust the structure of short-term capital withdrawal to ease the tight financial market situation.

Yesterday, the stock market gave a positive understanding of the signals released by the central bank.

The central bank released interest rate bidding in the open market yesterday, issuing 5 billion yuan RMB 3 month central bank votes, with a decrease of nearly 20% in last week's issuance, creating a new low in 10 months.

The issuance results showed that the central bank rose by 4.04 basis points to 1.4896% after the unexpected increase of 4.04 basis points last week.

Shi Lei, an analyst at Bank of China (601988), said that the obvious volatility of money market interest rates has shown that the interbank market liquidity is at a critical level from loose to tight.

On the whole, this is consistent with the central bank's recent policy orientation of strengthening liquidity management, and is also affected by short-term capital flows.

Yesterday, the 3 month trading in the currency market was quoted as 1.5973%/1.5455%, and the 1 year period was 2.0091%/1.9600%.

Industry experts believe that the winning rate of winning the 3 month central bank's continuous rise shows that in the context of the aggravation of economic growth concerns, the central bank will pay more attention to short-term tools in the selection of the term structure of capital withdrawal, and the next 3 month central bank votes will be reused.

In view of the current money market situation, many banks have voluntarily raised the earnings of ultra short term financial products on their second initiative.

If ICBC (601398) will have no fixed term, the annual yield of RMB over the short term will increase from 1.40% to 1.45%. Huaxia Bank (600015) a one year product return rate also increased to 4%, far higher than the 2.25% bank deposits in the same period.

It is understood that the investment direction of these short-term financial products is mainly treasury bonds, financial bonds, central bank bills, money market funds and so on.

Data show that the total number of central bank bills and repurchase bills expended this week amounted to 180 billion yuan, while the central bank issued 30 billion yuan 1 year notes on Tuesday. Accordingly, the central bank will invest 145 billion yuan in the open market this week.

Last week, the central bank cleared 51 billion yuan through the open market.

In addition, the central bank has not carried out repo operations for several weeks.

Analysts said that the central bank's net investment in the open market this week should relieve liquidity tensions at the source and help increase demand for the 3 month central bank.

Now, as long as the 1 - year central bank interest rate remains unchanged, it will not strengthen the expectation of further tightening monetary policy.

Market participants said that the time when the Shanghai stock index began to pull up after the fall of the Shanghai stock index yesterday coincided with the time of the issuance of the 3 month central bank ticket, which is at around 10. This indicates that the market parties have unified views on the stability of monetary policy in the coming period.

A trader in a joint-stock commercial bank said that the two month increase in the yield of the 3 month central bank's votes was aimed at attracting agencies to increase the allocation of the varieties. Meanwhile, the money market repo rate rose sharply, reflecting the fact that the funds were indeed tight at the moment.

The 3 - and 1 - year central banks have a longer lock up period. When the current economic situation is more uncertain, the central bank strengthens the use of short-term capital return tools, making the future monetary policy space more flexible.

She predicted that 3 months later, the economic situation at home and abroad would become clearer.

Shi Lei also believes that the uncertainty of internal and external environment has made China's macroeconomic regulation and control in a state of temporary tightening and turned to wait-and-see, and monetary policy is no exception.

The yield stability of the 1 - year central issue is stable, indicating the intention of monetary policy to maintain stability.

He stressed that it is not yet clear that monetary policy will be relaxed in the second half of the year, but at least the central bank will continue to raise interest rates for many times in the second half of the year.