Core Viewpoint - The liquidity gap in March is expected to narrow significantly compared to February, indicating a potential marginal improvement in the funding environment, contingent on the central bank's stance and policy direction during the Two Sessions [1][4]. Group 1: March Liquidity Gap Observations - The overall net financing from government bonds in March is projected to be approximately 1,100 billion [2]. - The expected fiscal revenue and expenditure gap for March is around -1,200 billion [2]. - Excluding MLF and reverse repos, the liquidity gap is anticipated to decrease significantly from February, suggesting a potential marginal improvement in the funding situation [2][4]. Group 2: Bank Liability Pressure - There is considerable pressure on banks' liabilities, particularly due to the outflow of long-term funds, which cannot be fully resolved through market behavior alone and requires regulatory support [3]. - The cautious approach of the central bank in monetary policy may lead to a release of easing signals if the Two Sessions effectively boost market confidence and alleviate the rapid decline in long-term bond rates [3]. - Conversely, if the economic recovery does not show significant pressure, the central bank's focus may remain on stabilizing the exchange rate and preventing risks [3]. Group 3: Future Outlook - The liquidity situation in March will largely depend on the central bank's attitude, especially considering that fiscal expenditures typically occur at the end of the month and the ongoing pressure on bank liabilities [4]. - Continuous observation and tracking of the policy direction from the Two Sessions and the central bank's monetary policy usage in March are essential [4].

Core Viewpoint - Since the beginning of the year, the funding environment has remained tight, particularly with a noticeable increase in short-term interest rates. The article explores the remaining government debt supply for the first quarter, the liquidity gap in March, and whether the funding situation will improve [1][4]. Group 1: Funding Tightness - The funding environment has been tight since the start of 2025, with the central bank increasing the scale of reverse repos. Despite this, the pressure on liquidity has slightly eased from January to February, with a reduction in liquidity stratification [1][4]. - The central bank's operations included a resumption of 14-day reverse repos before the Spring Festival, while the scale of medium-term lending facility (MLF) continued to decrease. The buyout reverse repo operations have provided significant support for medium to long-term liquidity [5][6]. Group 2: Government Debt Supply - In March, it is estimated that the issuance of government bonds will reach approximately 1.4 trillion yuan, with a net financing scale of nearly 650 billion yuan after accounting for 712.2 billion yuan in maturing bonds. Local government bonds are expected to total around 1.3 trillion yuan, resulting in a combined net financing scale of over 1.8 trillion yuan for government debt [2][14]. Group 3: Liquidity Outlook - The liquidity gap in March is projected to be around 260 billion yuan, indicating some pressure on the funding environment. However, after the "Two Sessions," funding rates are expected to trend towards easing, with the central bank's net injection likely to increase marginally [3][19]. - The article suggests that the central bank may primarily use buyout reverse repos to supplement medium to long-term liquidity during the phase of increased government debt supply, which could lead to a decrease in funding rates, especially for short-term bonds [19].