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MNI China Money Market Index™ – PBOC To Steepen Yield Curve

MNI (London)
China Liquidity IndexDataIndicators - press release

Key Points – September Report

Introducing the updated MNI China Money Market Index (MMI), formerly the MNI China Liquidity Index, which has been adapted to reflect the PBOC's monetary policy.

Weak credit demand that has trapped interbank liquidity and fuelled the recent bond rally will lead the People’s Bank of China to take a more flexible approach to further injections via its open market operations, while it simultaneously attempts to steepen the yield curve via its bond trades, results from MNI’s China Money Market Index revealed.

The outlook subindex covering the PBOC’s OMO over the coming month showed 67.4% of participants expected a net drain as the PBOC aims to discourage idle funds within the market. The current liquidity conditions subindex also reflected the PBOC’s caution at 86.0 in September – a 2024 peak – up from the previous month’s 32.6, with 79.1% of respondents reporting tighter conditions.

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Key Points – September Report

Introducing the updated MNI China Money Market Index (MMI), formerly the MNI China Liquidity Index, which has been adapted to reflect the PBOC's monetary policy.

Weak credit demand that has trapped interbank liquidity and fuelled the recent bond rally will lead the People’s Bank of China to take a more flexible approach to further injections via its open market operations, while it simultaneously attempts to steepen the yield curve via its bond trades, results from MNI’s China Money Market Index revealed.

The outlook subindex covering the PBOC’s OMO over the coming month showed 67.4% of participants expected a net drain as the PBOC aims to discourage idle funds within the market. The current liquidity conditions subindex also reflected the PBOC’s caution at 86.0 in September – a 2024 peak – up from the previous month’s 32.6, with 79.1% of respondents reporting tighter conditions.

Keep reading...Show less