Core Viewpoint - The People's Bank of China (PBOC) is intensifying its mid-term liquidity injection to stabilize the financial market amid significant upcoming fund maturities, with a net injection of 300 billion yuan through Medium-term Lending Facility (MLF) operations [1][2]. Group 1: Liquidity Injection Details - On September 25, the PBOC conducted a 600 billion yuan MLF operation, resulting in a net injection of 300 billion yuan after 300 billion yuan of MLF matured [1][2]. - The PBOC has maintained a net injection of mid-term liquidity for seven consecutive months, indicating a consistent policy stance to support market liquidity [1][2]. - In September, the PBOC has also conducted two buyout reverse repurchase operations totaling 300 billion yuan, maintaining the same scale as the previous month [1][2]. Group 2: Market Conditions and Responses - The week of September 22-26 saw a high maturity of funds totaling 21,268 billion yuan, raising concerns about liquidity pressure in the market [2]. - The PBOC's timely MLF operation on September 25 alleviated liquidity pressure, providing reassurance to the market [2]. - Recent liquidity management efforts have been characterized by a clear intention to support market liquidity, especially following a 10 trillion yuan long-term liquidity release in May [2]. Group 3: Interest Rate Movements - On September 24, short-term interbank lending rates (Shibor) rose across the board, indicating tightening liquidity conditions [4]. - The increase in Shibor rates reflects the necessity for the PBOC to enhance mid-term liquidity injections to address seasonal pressures [4]. Group 4: Operational Adjustments - The PBOC has optimized its operational tools and timing to enhance liquidity management, including the reintroduction of 14-day reverse repurchase operations [5][6]. - The adjustment of the 14-day reverse repurchase operation mechanism to a "fixed quantity, interest rate bidding, multiple price bidding" model aims to improve liquidity management precision [5][6]. Group 5: Future Outlook - Experts predict that the PBOC will continue to support market liquidity, with potential downward pressure on the 14-day reverse repurchase rate [7][8]. - The recent reforms signal a commitment to a loose monetary policy, which is expected to positively impact the bond market [8].

Group 1 - The central bank has resumed 14-day reverse repurchase operations for the first time in eight months, injecting 300 billion yuan into the market on September 22, alongside 240.5 billion yuan in 7-day reverse repos, resulting in a net injection of 260.5 billion yuan for the day [1] - The resumption of the 14-day reverse repo is a routine measure by the central bank to address cash withdrawal demands from residents ahead of the National Day holiday, a practice that has been in place since 2019 [1] - Analysts expect the central bank to continue conducting 14-day reverse repos until the end of the month to maintain short-term liquidity, followed by a net withdrawal post-holiday to stabilize liquidity levels [1] Group 2 - On September 19, the central bank announced adjustments to the 14-day reverse repo auction method to better meet the diverse funding needs of different institutions, shifting to a fixed quantity, interest rate bidding, and multiple price bidding approach [2] - The adjustment aims to avoid concentrated maturities during the National Day holiday, as the actual maturity of the 7-day reverse repo will exceed 7 days due to the holiday period [2] - The new auction mechanism aligns the 14-day reverse repo with the Medium-term Lending Facility (MLF) operation, reinforcing the 7-day reverse repo rate as the primary policy rate [2] Group 3 - The fixed income team at Zheshang Securities believes that the new monetary policy transmission mechanism will link deposit rates to the 10-year government bond yield and the 1-year Loan Prime Rate (LPR), while insurance product rates will be adjusted based on the 5-year LPR and 5-year fixed deposits [3] - The LPR pricing mechanism will reference the 7-day reverse repo rate and the spreads from various quoting banks [3] Group 4 - As the end of the quarter approaches, the central bank faces a liquidity test with over 2 trillion yuan in open market maturities, but fiscal deposits are expected to provide some liquidity support [4] - Market analysts predict that the interbank market will experience a "stable yet concerning" liquidity situation, with the central bank likely to maintain a proactive stance on liquidity management [4] - The central bank is expected to continue reasonable open market operations to ensure smooth liquidity during the quarter-end and holiday periods, with fluctuations in funding rates likely to remain within seasonal norms [4]

Core Viewpoint - The People's Bank of China (PBOC) has made significant adjustments to the 14-day reverse repurchase operation to enhance liquidity management and better meet the diverse funding needs of different institutions [1][2][3] Group 1: Adjustment of 14-day Reverse Repo - The 14-day reverse repo operation will now adopt a fixed quantity, interest rate bidding, and multiple price bidding, allowing institutions to quote based on their funding needs and risk preferences [2][3] - This change clarifies the positioning of the 14-day reverse repo as a liquidity tool and strengthens the policy status of the 7-day reverse repo operation rate [2][3] Group 2: Transition to Price-based Monetary Policy - The adjustment reflects a continued shift towards a price-based monetary policy framework, which began with the 7-day reverse repo operation being adjusted to fixed interest rates and quantity bidding [2][3] - The PBOC aims to enhance the market's pricing capabilities and improve the transmission of interest rates from short to long-term [3] Group 3: Flexibility and Precision in Liquidity Management - The PBOC's liquidity management is becoming more flexible and precise, with the ability to adjust operation times and scales based on liquidity needs [3][4] - The upcoming 14-day reverse repo operations may be conducted ahead of holidays to meet liquidity demands, indicating a proactive approach to liquidity management [3][4] Group 4: Adequate Liquidity Tools - The PBOC has a well-stocked toolbox for liquidity management, including various tools for different time frames, ensuring a balanced distribution of liquidity resources [4] - The central bank is likely to continue to provide liquidity based on economic and market conditions while optimizing structural monetary policy tools to support high-quality economic development [4]

Core Viewpoint - The People's Bank of China (PBOC) is actively managing liquidity through various market operations, including reverse repos, to ensure stable financial conditions and support economic recovery [1][3][4]. Group 1: Market Operations - On September 17, the PBOC conducted a 7-day reverse repo operation of 418.5 billion yuan at a fixed rate of 1.40%, resulting in a net injection of 114.5 billion yuan after 304 billion yuan of reverse repos matured [1]. - On September 15, the PBOC executed a 6-month buyout reverse repo operation of 600 billion yuan, which allows financial institutions to temporarily transfer bond ownership to the PBOC, thus stabilizing medium to long-term funding needs [1]. - The PBOC's operations are characterized by a combination of short-term and medium-term liquidity support, aiming for precise control over market liquidity [1][3]. Group 2: Interest Rates and Market Conditions - The interbank market rates have shown a slight upward trend, with the weighted average rate of the pledged repo (DR007) rising to 1.5404% as of the latest data [2]. - Overnight Shibor increased by 4.6 basis points to 1.4830%, while the 7-day Shibor rose by 4.4 basis points to 1.5190% [2]. - Overall, the liquidity market remains stable, with overnight rates between 1.4% and 1.45%, and 7-day rates around 1.5% [3]. Group 3: Future Monetary Policy Outlook - The PBOC is expected to increase liquidity injections to counter tightening funding pressures as local government bond issuance rises [3]. - The PBOC aims to implement a moderately loose monetary policy, enhancing counter-cyclical adjustments and supporting key sectors such as technology and consumption [3][4]. - The combination of rate cuts, reserve requirement ratio reductions, and open market operations has effectively supported economic recovery and stabilized financial markets [4].

Group 1 - The central bank will conduct a 600 billion yuan Medium-term Lending Facility (MLF) operation next week, with a net MLF injection of 300 billion yuan in August, marking six consecutive months of increased liquidity [1][2] - The total net liquidity injection for August has reached 600 billion yuan, the highest monthly figure since February, due to the combination of MLF and reverse repos [1][2] - Analysts indicate that the continuous increase in MLF reflects a proactive monetary policy aimed at stabilizing market expectations and supporting credit issuance [2][4] Group 2 - The focus of monetary policy is shifting towards "implementation and precision," with an emphasis on effective execution and flexibility, while maintaining ample liquidity [3][4] - The probability of a reserve requirement ratio (RRR) cut in the short term is low, with the fourth quarter potentially being a critical window for further policy adjustments [3][5] - The bond market remains stable, supported by the central bank's liquidity management and the absence of significant redemption pressures [2][3]

Core Viewpoint - The People's Bank of China (PBOC) is maintaining a reasonable liquidity level in the banking system through small-scale reverse repurchase operations, indicating a shift towards more precise and flexible monetary policy management [1][3][4] Group 1: Reverse Repo Operations - The PBOC conducted a reverse repo operation of 2 billion yuan on August 3, with a stable bidding rate of 2.10%, marking the sixth consecutive day of 20 billion yuan operations since July 27 [1] - The recent trend shows a departure from the traditional 100 billion yuan operations, with the PBOC adopting smaller and more varied amounts to better balance short-term liquidity needs [3] - The dynamic adjustment of reverse repo scales is aimed at maintaining stability in the banking system's liquidity, rather than signaling a tightening of monetary policy [4] Group 2: Market Liquidity and Interest Rates - The Shanghai Interbank Offered Rate (Shibor) for overnight loans fell by 10.1 basis points to 1.076% on August 2, indicating a softening in market liquidity [2] - The weighted average rate of the DR007 repo declined to 1.3862%, which is below the policy rate level, suggesting that liquidity remains ample despite the PBOC's operations [2] - Experts believe that the current liquidity environment is influenced by fiscal and monetary policy measures aimed at addressing economic downward pressure, with financing demand from the real economy still in a recovery phase [2][4] Group 3: Future Outlook - Analysts expect that funding rates will remain low and liquidity will continue to be reasonably ample, with the PBOC likely to use open market tools for flexible adjustments in response to short-term disturbances [4] - The ongoing economic recovery is seen as a critical period, with both fiscal and monetary policies expected to actively support liquidity, reducing the likelihood of sudden tightening [4]

Core Viewpoint - The People's Bank of China (PBOC) continues to implement a moderately accommodative monetary policy in June, providing a suitable liquidity environment to support economic recovery [1] Group 1: Liquidity Tools and Net Injection - In June, the PBOC achieved a net injection of 656 billion yuan through various liquidity tools, with short-term reverse repos contributing 535.9 billion yuan [1] - The MLF (Medium-term Lending Facility) saw a net injection of 118 billion yuan in June, with a total of 2.35 trillion yuan injected in the first half of 2025, all with a one-year term [2] - The PBOC's use of liquidity tools reflects a focus on supporting key sectors such as consumption, manufacturing, foreign trade, private enterprises, and real estate [1] Group 2: MLF and Reverse Repo Operations - The MLF has transitioned from a supplementary liquidity tool to a primary monetary policy tool, with its role evolving over the past decade [2] - The PBOC's short-term reverse repo operations are aimed at maintaining short-end liquidity, with the DR007 rate being a critical indicator of liquidity tightening [3] - The PBOC's buyout reverse repo operations have increased, with a net injection of 200 billion yuan in June, helping to lower funding costs for financial institutions [4] Group 3: Buyout Reverse Repo Implementation - Since the introduction of buyout reverse repos in October 2024, the balance has gradually increased, alleviating pressure on MLF for medium-term liquidity [5] - The regular operation of buyout reverse repos enhances liquidity management and fills the gap between the 7-day reverse repo and the 1-year MLF [5]

Report Investment Rating No industry investment rating is provided in the report. Core Viewpoint In the short term, the market may continue to fluctuate as it awaits further confirmation of monetary policy. Subsequently, it is expected to break through the downward space and approach the low point. Although the liquidity in July may remain relatively loose, from the perspective of coordinating fiscal policies and managing market expectations, treasury bond trading may not necessarily occur during this window period. The amplitude and rhythm of the curve opening up space require reasonable assessment [35]. Summary by Directory 1. Stock Market Suppression, Bond Market First Weak then Strong, Curve Slightly Steepened - This week (June 23 - June 27), the cross - quarter and the stock - bond "seesaw" were the main factors influencing the bond market. The stock market's strength in the first half of the week suppressed the bond market, but the central bank's increased liquidity injection and insurance replenishment provided some support. In the second half of the week, the bond market recovered as the stock - bond linkage effect weakened and the stock market declined, along with uncertain industrial enterprise profit data [1][8]. - On a daily basis, the bond market showed different trends each day. By June 27, the yields of 1Y, 5Y, 10Y, and 30Y treasury bonds changed by - 1, + 0.4, + 0.7, and + 1.2 BP respectively compared to June 20, and the curve steepened slightly. Most yields of major - term certificates of deposit (CDs) increased [8]. 2. Cross - quarter Overall Secure, Bank Liability - side Pressure Controllable - This week, the overall funding situation was stable, with increased fluctuations approaching the quarter - end. The 7 - day funding rate rose significantly, and the government bond issuance scale was large in the first half of the week. However, the central bank's intention to support was obvious, with reverse repurchase injections exceeding 2 trillion yuan. CD issuance rates fluctuated slightly, and large - bank lending remained stable around 4 trillion yuan, indicating that cross - quarter funds were generally secure and bank liability - side pressure was relatively controllable [2][13]. - The 7 - day funding rate center increased, and the DR001 still ran below the policy rate. As of June 27, the weekly averages of DR001 and R001 changed by - 0.53 and + 0.58 respectively compared to the previous week, while those of DR007 and R007 changed by + 12.75 and + 24.03 BP respectively. The phenomenon of funding stratification became more prominent, and the funding pressure on non - bank institutions increased during the cross - quarter period [13]. 3. The "Actions" and "Inactions" of Central Bank Monetary Policy - In June, market discussions about whether the central bank would restart treasury bond trading intensified. Since June, large banks' purchases of short - term treasury bonds (especially 1 - 3Y) increased year - on - year and month - on - month, which made the market more likely to associate this with the restart of treasury bond trading operations [19]. - The central bank suspended treasury bond purchases in 2025 mainly due to the improvement of the government bond supply - demand relationship and to avoid creating strong market expectations. After the market adjustment in the first quarter, an expert view in the Financial Times on April 13 suggested that the central bank might buy new treasury bonds in the secondary market if the interest - rate increase pressure from expansionary fiscal policies weakened policy effectiveness [3][25]. - In the first half of 2025, the bond market's funding situation was volatile. Monetary policy showed more characteristics of dynamic equilibrium and contingency decision - making among multiple goals. The central bank's shift from "restraint" to "support" in liquidity injection corresponded to the change in policy goal priority from "risk prevention" to "stable growth" [4][29]. - Currently, the central bank's "inactions" may include: improved flexibility and precision in liquidity regulation in 2025, with June smoothly passing multiple liquidity tests; large banks' purchases of short - term treasury bonds may not directly equal the central bank's purchases; the central bank is still concerned about bond market interest - rate risks; and the government bond supply pressure decreased in June, with the next peak likely in August - September. Therefore, treasury bond trading may not necessarily occur in July, and the market may fluctuate in the short term [30][35]. 4. Next Week's Focus - June 30: China's official manufacturing PMI for June, Eurozone's M1/M2/M3 for May, Germany's CPI for June. - July 1: Eurozone's CPI for June, US ISM manufacturing PMI for June. - July 2: US ADP employment for June. - July 3: US non - farm payrolls for June, US ISM non - manufacturing PMI for June. - July 4: EU PPI for May [38][39].

Group 1 - The People's Bank of China (PBOC) shifted from net liquidity injection to net withdrawal, conducting a 454.5 billion yuan reverse repurchase operation, resulting in a net withdrawal of 375.5 billion yuan on June 3 [1] - Analysts expect the PBOC to maintain a reasonable liquidity level, utilizing various short- and medium-term liquidity management tools to ensure sufficient liquidity in the banking system as the mid-year approaches [1][2] - Historical trends indicate that June is a significant month for credit issuance, with banks likely to increase reserve requirements seasonally, impacting liquidity [1] Group 2 - The PBOC has room for further monetary policy easing, aiming for "appropriate looseness" while flexibly adjusting the implementation of policies based on domestic and international economic conditions [2] - The PBOC's liquidity management tools are becoming more balanced in terms of duration, allowing for precise liquidity adjustments through various instruments [2] - The PBOC may consider resuming government bond trading operations based on market conditions and yield changes, as indicated in the 2025 Q1 monetary policy report [2] Group 3 - There is limited pressure for tightening liquidity in the future, with the interbank market's 7-day bond repurchase rate expected to fluctuate around 1.5% [3] - The PBOC is committed to implementing an appropriately loose monetary policy while coordinating with fiscal policies to promote high-quality economic development [3]

Core Viewpoint - The issuance of ultra-long-term special government bonds and central financial institution capital injection bonds has commenced, supported by stable market liquidity and monetary policy tools from the central bank [1][4]. Group 1: Bond Issuance Details - The issuance amounts for the ultra-long-term special government bonds are 500 billion for 20-year bonds, 710 billion for 30-year bonds, and 1650 billion for central financial institution capital injection bonds [2]. - The winning bid rates are 1.98% for 20-year bonds, 1.88% for 30-year bonds, and 1.45% for 5-year bonds, with overall bid multiples of 3.11, 3.66, and 2.67 respectively [2]. - The issuance reflects a rational market response, with no signs of excessive bidding, indicating strong demand from institutional investors [2][3]. Group 2: Market Reactions and Trends - The current issuance shows a yield inversion where the 20-year bond yield is higher than the 30-year bond yield, which is contrary to typical market behavior [3]. - The increase in the scale of bond issuance is expected to significantly boost government debt supply this year, with a planned issuance of 1.3 trillion in ultra-long-term special government bonds, up by 300 billion from 2024 [4]. - The central bank's recent MLF operations have injected 5000 billion into the market, indicating a proactive approach to maintain liquidity and support the bond issuance [5][6]. Group 3: Future Market Outlook - The bond market is anticipated to experience a peak in issuance from May to June, with local government bonds expected to maintain a rapid issuance pace [8]. - Market sentiment is becoming more optimistic due to ongoing liquidity support and signals from the political bureau meeting regarding proactive fiscal policies [8][9]. - The central bank is likely to provide additional easing measures to support fiscal policies, maintaining a consistent policy direction [10].