Tightening On The Horizon?

The PBOC injected CNY 10bn of liquidity via 7-day reverse repos today, the overnight repo rate has increased 46bps, last 1.9745%, but the move looks tame when compared to the 3.55% seen at the end of January, the 7-day repo rate is steady.

• A piece in China's Economic Information Daily could add fuel to the fire in terms of tightening speculation, there was a front page commentary that predicted China's economy will grow 8% in 2021 after posting 2.3% growth in 2020. The piece also stated steady improvement in China's economic fundamentals is creating conditions for the country to normalize its monetary policy.
• Data earlier in the session was positive, China's home prices rose 0.28% in January, accelerating a 0.12% pick up in December. Supply dynamics are spurring the increase, even as the government widens measures designed to curb housing speculation.
• China will bring supply to the market tomorrow, selling a total CNY 133bn through 2-, 5-, 10-year auctions. The short end of the cash curve has seen some selling as a result, yields around 0.3bps higher, futures are slightly lower as equity markets extend yesterday's declines.