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LPR Rates On Hold For Twelfth Month


China kept its Loan Prime Rates (LPR) on hold at 3.85% and 4.65% for the 1-year and 5-year, respectively. This is the twelfth month of unchanged rates, was widely expected and received to little fanfare. As a note, The PBOC conducted MLF operations last week, and kept the rate unchanged; the previous the occasions that the LPR was changed was preceded by a change in the MLF rate.

  • The PBOC matched maturities with injections, the thirty first straight session, the last time the bank injected funds into the financial system was Feb 25, the PBOC also drained CNY 6.1bn of liquidity at the MLF operations last week, letting a total CNY 156.1bn of MLF and TMLF loans roll off, and injecting CNY 150bn. Repo rates are higher, the overnight repo rate up 15.8bps at 1.858% but down from 2.11% yesterday, the 7-day repo rate is unchanged at 2.20%, exactly the prevailing repo rate after dropping from above the level yesterday.
  • Futures in China are higher, though moves are muted in early trade, but as usual Chinese bond markets are defying the broader regional tone. Corporate bond spreads are steady, Huarong's dollar bonds continued to rise yesterday, reversing last week's plunge after words of support from the regulator. The move higher in corporate bonds yesterday was attributed as being part of the reason Chinese government securities were under pressure.
  • Data from China Central Depository & Clearing showed that international ownership of Chinese government debt declined slightly in March by around 1%, to CNY 2.04tn. That was the first drop in foreign investors' positions since February 2019. It came in a month when the yuan weakened more than 1% against the dollar.
  • Markets await a speech from Chinese President Xi at the annual Boao Forum.

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