Interbank repo rate fell, liquidity is temporarily loose but expected to tighten

Core Tip: On the 7th, the main repo rate in the interbank market was further lowered, and the funds continued to be loose. The overnight pledged repo is now reduced, showing short-term liquidity. However, long-term capital prices and interbank deposit rates have both risen, reflecting the market's poor expectations for inter-annual liquidity. Under the continuous net return of the open market, the fabric of the fund loosening bureau is difficult to sustain.

Beijing (CNFIN.COM/XINHUA08.COM) - On November 7, the main repo rate in the interbank market was further lowered, and the funds continued to be loose. The overnight pledged repo is now reduced, showing short-term liquidity. However, long-term capital prices and interbank deposit rates have both risen, reflecting the market's poor expectations for inter-annual liquidity. Under the continuous net return of the open market, the fabric of the fund loosening bureau is difficult to sustain.

The bank's overnight pledge repo weighted average interest rate fell 1.14 basis points to 2.0869% in the afternoon; the 7-day interest rate fell 0.79 basis points to 2.2902%; the 14-day interest rate fell 5.54 basis points to 2.4489%. The 1-year loan base rate (LPR) is maintained at 4.30%.

Shanghai Interbank Offered Rate SHIBOR showed that Shibor reported 2.260% overnight, down 2.60 basis points; 7 days Shibor reported 2.3990%, down 0.60 basis points; 3-month Shibor reported 2.8576%, up 1.1 basis points.

Traders said that the net return to the open market is not yet obvious. However, the market is not very optimistic about long-term liquidity. From the perspective of interbank deposit prices, the price of deposit certificates has fallen in the past month, but the prices of the New Year have been going up, and the demand is also weak, indicating that everyone compares long-term funds. Concerned, the bank's cross-year financing costs are rising.

This morning, the central bank launched a 20-billion-day reverse repurchase operation in the open market, and the winning bid rate was flat at 2.25%. On the same day, the 160 million yuan reverse repurchase expired, and the net withdrawal of funds in a single day was 140 billion yuan, which was the fourth consecutive day of net withdrawal.

According to the statistics of China Financial Information Network's RMB channel, this week (November 7th - November 13th) the central bank's open market has 670 billion yuan reverse repurchase due. The 7-day and 14-day maturity amounts were 3,300 and 340 billion yuan respectively, and no central bank bills and repurchase agreements expired. The reverse repurchase maturity from Monday to Friday was 160 billion yuan, 185 billion yuan, 155 billion yuan, 85 billion yuan and 85 billion yuan.

Since entering November, the funds have returned to easing, and the interest rate of funds has dropped significantly. The central bank immediately suspended the net release in the open market, and continued to carry out a net return operation, using actual actions to show that it does not want liquidity to be too loose.

The CITIC Securities collection team believes that overall, the total amount of monetary policy operations has not tended to be loose, still substantial and stable, liquidity remains neutral, and the funds are maintained in a tight balance.

At the same time, the latest non-agricultural employment data is in line with the Fed's description of the “sustainable strength” of the employment market. The possibility of a rate hike in December is further increased. This week, the US dollar index may further strengthen, opening a time window for the depreciation of the RMB exchange rate. At the same time, the final results of this week's US election will soon be announced, and the global financial market is also preparing for the upcoming fluctuations. Fluctuations in exchange rates and uncertainty will also put some pressure on the domestic market.

Analysts believe that before the end of the year, the funds will be in a tight balance, and the stable orientation of monetary policy will not change during the year, especially when the depreciation rate of the RMB exchange rate has accelerated, the exchange rate will continue to stagnate interest rates and will also restrict The independence of monetary policy.