-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Chart Packs -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI Liquidity Survey: PBOC Slows Leveraging With Lqdty Squeeze
--Fewer Survey Participants Think PBOC Imposed A Tighter Bias
--Majority of Traders Sees Economy As Same or Worse Than Previous Month
--More Traders Expect 7-day Repo Rate to Fall Over Next Two Weeks
BEIJING (MNI) - Tighter liquidity conditions across money markets is the
stand out feature from MNI's latest monthly China Interbank Survey, which gauged
the opinions of 19 traders from financial institutions operating in China's
interbank market, the economy's main source of financing.
The latest survey, conducted between April 23 to April 27, shows 73.7% of
respondents believe liquidity conditions have deteriorated, the highest number
since November 2017. That's up from 10% in March and 68.4% in April last year.
The percentage hadn't previously been over 50 this year.
The PBOC has been parsimonious with its cash since the middle of April and
the April 25 Reserve Requirement Ratio reduction, has not helped sate a thirsty
market.
However, fewer survey participants think the PBOC imposed a tighter bias in
its monetary policy. Only one out of the 19 traders noted the tighter bias, the
second lowest level since Sep. 2016 , with only last March ahead.
--PESSIMISTIC OUTLOOK
March economic data were weaker than expected across the board -- from the
PMI to new loans and investment -- and pessimism about the economic outlook is
pervasive, with 18 of the 19 traders surveyed seeing economic conditions as the
same or worse than the previous month.
"The market is overly pessimistic about the economy," said a Beijing-based
trader who works for a commercial bank and the only respondent of 19 to say that
economic conditions are improving, "China's economy is under transition. The
investment in hi-tech sector will set off the influence of weak exports and
infrastructure investment," he said.
Even with the current liquidity tightening, the majority of traders
surveyed, 73.7%, expect the seven-day repo rate to fall over the next two weeks,
the highest percentage since MNI started the survey in May, 2014. That's partly
because the PBOC has introduced the RRR cut.
Indeed, the seven-day repo rate fell to 2.9455% on Wednesday from 3.0269%
on Friday.
Government bond yields have tumbled as much as 40 bps this year, as
disappointing economic data boosted expectations among some investors for
monetary easing. After the PBOC announced the RRR cut, 10-year CGB yields fell
to 3.5013% on April 18 from 3.6512% the previous day.
--NO MAJORITY FOR BOND RALLY
A total 26.3% of traders in the Market News survey expect the yield on the
10-year government bond to be lower in three months' time, the joint highest
since June, 2017 (matches Oct 2017).
Even so, the number of traders who see scope for yields on 10-year
government bond yields to rise or remain unchanged are still the majority.
The survey also saw 13 out of 18 traders, or 72.2%, predict the PBOC will
continue to hike its OMO rates this year. On March 22, the PBOC raised its OMO
rates by 5 bps following the Federal Reserve rate hike.
However, 10 out of 15 traders, or 66.7%, expect benchmark interest rates to
remain unchanged or fall this year on economic downturn concerns.
The survey result marks changed expectations in the market.
Over the last year, it has been expected that the PBOC may hike benchmark
rates to enforce the deleveraging move, narrowing the gap between real market
rates and benchmark rates in the process of rate liberalization. However, the
authorities' recent emphasis on economic stability has seen rate hike
expectation fade, with some trader predictions of rates cuts starting to
emerging.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MC$$$$,MT$$$$,MX$$$$,MN$MM$]
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.