Repo Rates Higher As PBOC Matches Liquidity Again

The PBOC matched maturities with injections again today, the nineteenth straight day of matching maturities, while the bank hasn't injected funds since February 25. Repo rates have risen again after moving higher heading into month/quarter end yesterday. Overnight repo rate up 45bps at 2.1564%, while the 7-day repo rate has come off highs and is last at 2.1273%, below the 2.20% offered by the PBOC and below the 2.60% peak yesterday. The PBOC yesterday said it would ensure adequate liquidity through April.

• Futures are broadly flat, moving out of negative territory following the weak PMI print. Caixin China PMI Manufacturing fell to 50.6 in March from 50.9, below estimates of 51.4. The figure denotes an 11-month low point, the findings contrast with those in an official survey which showed manufacturing activity grew at a stronger pace as large firms ramped up production after a brief lull during the Lunar New Year holidays. The Caixin survey focuses on small, private and export-oriented firms while the official survey typically polls large and state-owned manufacturers. Among the subcomponents input costs hit the highest in 40 months, "We should pay attention to inflation in future as the gauges for input and output prices have been rising for several months," said Wang Zhe, Senior Economist at Caixin Insight Group, "the growing inflationary pressure limits the room for future policies and is not a good thing for sustaining an economic recovery in the post-epidemic period."
• Meanwhile, geopolitical tensions continue to simmer, the Biden administration yesterday raised concerns over policy tools China uses to encourage economic growth.
• PBOC has plans to adopt a monitoring system that will facilitate transparency to foreign institutional investors in China's interbank bond market. According to a PBOC statement the local regulator should report business operations of these investors to PBOC on regular basis, and the National Interbank Funding Center should improve its service to support foreign institutional investors to trade as legal entities.
• Elsewhere, China is said to be considering forming a new stock exchange to attract overseas-listed firms from markets like Hong Kong and the US, Reuters reports. China's State Council has reportedly asked the CSRC to ascertain how an index would be structured to lure mainland companies listed offshore.