PBoC Deploys Record Reverse Repo Injection As Interbank Markets Tighten

Plenty of attention on the move higher in onshore China funding rates and subsequent PBoC reverse repo action ahead of the weekend.

• We would point to increased bond issuance and impending tax payments as a driver of rates here.
• The move in rates resulted in the PBoC deploying the largest ever net daily cash injection via OMOs earlier today.
• This followed a multi-year high net MLF injection earlier in the week.
• Some have also pointed to lower odds of imminent PBoC easing as a liquidity tightening impulse.
• Elsewhere, reports have pointed to less willingness on the part of banks re: interbank lending, which will have tightened liquidity and biased rates higher.