Core Viewpoint - The People's Bank of China (PBOC) has paused its government bond trading operations since January 2025, leading to market speculation about when these operations will resume, especially after a significant liquidity injection of 1 trillion yuan through net bond purchases from August to December 2024 [1][3]. Group 1: Market Reactions and Expectations - Following the announcement of the joint meeting between the Ministry of Finance and the PBOC, the bond futures market reacted positively, with significant increases in various contract maturities [1]. - Analysts suggest that the current market environment is more suitable for the resumption of bond purchases compared to the previous year, indicating a gradual increase in the probability of resumption [2][3]. Group 2: Economic Context and Policy Coordination - The PBOC's bond trading operations are primarily aimed at liquidity management, and the recent discussions emphasize the need for better coordination between fiscal and monetary policies to support economic growth [6][7]. - The joint working group aims to enhance cooperation between fiscal and monetary policies, which is crucial for addressing the current complex market conditions and promoting economic recovery [8][9]. Group 3: Future Projections and Impacts - Analysts predict that the resumption of bond trading operations could occur in the fourth quarter of 2025, coinciding with significant economic data releases and government meetings [4][10]. - The anticipated resumption of operations may restore the balance of 1 trillion yuan, with short-term bonds likely becoming the primary focus of these operations [4][10]. - The emphasis on liquidity management through bond trading is expected to stabilize the bond market and mitigate the impact of government bond supply on liquidity [10][11].

此时央行买入国债对收益率的下行压力会明显弱于去年，当前市场环境已较为适宜操作重启。 央行国债买卖操作定位于基础货币投放渠道和流动性管理工具，于2024年8月正式推出。2024年8月至12 月，央行通过公开市场开展的国债买卖操作累计实现净买入1万亿元，为债券市场流动性调节和稳定运 行提供重要支撑。 继去年8〜12月连续5个月净买入国债释放万亿流动性后，中国人民银行自2025年1月起暂停的"国债买卖 操作"何时重启，持续引发关注。 中国人民银行官网9月3日晚发布消息，财政部与中国人民银行联合工作组近日召开第二次组长会议，就 金融市场运行、政府债券发行管理、央行国债买卖操作和完善离岸人民币国债发行机制等议题进行了深 入研讨。 具体而言，2024年8月、9月、10月、11月和12月，央行净买入债券面值分别为1000亿元、2000亿元、 2000亿元、2000亿元和3000亿元。 但自2025年1月起，该操作进入阶段性暂停状态。截至第二次组长会议召开时，"空窗期"已长达8个月。 其中，"国债买卖操作"被纳入研讨范围，点燃了市场对于"人民银行何时重启国债买卖"的关注。这一操 作已暂停8个月之久，过去数月的话题热度一直居高 ...

Investment Rating - Industry Rating: Outperform the Market (maintained rating) [3] Core Insights - The central bank is unlikely to restart government bond purchases in the short term due to macro-prudential considerations and the current state of the bond market [1][9][11] - The central bank's recent report indicates a focus on preventing excessive reductions in loan pricing, emphasizing a bottom-line thinking approach to loan pricing [2][14][15] - A significant probability exists for deposit rate cuts to be implemented in the second quarter, which is expected to improve the net interest margin by 3 basis points [3][16][21] Summary by Sections 1. Government Bond Purchase Operations - The central bank will continue to observe and assess the bond market, indicating no immediate need to restart bond purchases [1][9] - The 10-year government bond yield has recently dropped to a low range of 1.6%-1.7%, suggesting a demand for support from the central bank [11][12] - The decision to restart operations will depend on market supply and demand, with current conditions not necessitating immediate action [10][12] 2. Loan Pricing Signals - The report details the distribution of loan pricing reductions, indicating a trend towards more significant reductions [2][14] - The central bank aims to prevent loan rates from falling below the breakeven point, which is crucial for maintaining banks' net interest margins [15] - Recent regulatory measures have been introduced to curb excessively low loan pricing, particularly for corporate loans and consumer loans [14][15] 3. Deposit Rate Cuts - The central bank has indicated a likely reduction in deposit rates, which typically precedes a decrease in the Loan Prime Rate (LPR) [3][16] - Historical patterns show that deposit rate cuts often lead to subsequent adjustments in policy rates and LPR [16][18] - The expected deposit rate cuts are projected to save interest expenses of approximately 884 billion, improving the net interest margin by 3 basis points [21][25]

Core Viewpoint - The People's Bank of China (PBOC) has adopted a moderately loose monetary policy, focusing on maintaining liquidity and stabilizing market interest rates through various tools, including reverse repos and medium-term lending facilities (MLF) [1][2][3]. Group 1: Monetary Policy Actions - In March, the PBOC conducted 800 billion yuan in reverse repo operations and did not engage in government bond transactions [1]. - With 700 billion yuan of reverse repos maturing in March, the net injection for the month was 100 billion yuan, continuing to release medium-term liquidity [2]. - The PBOC's net injection of medium-term funds was 9.05 trillion yuan, 4 trillion yuan, and 1.63 trillion yuan in January to March, totaling over 1.4 trillion yuan for the first quarter [2]. Group 2: Market Conditions - The banking system has experienced a tight funding environment, with the weighted average interest rate for 7-day repo transactions remaining above 1.7% and exceeding 2.0% since March 27 [2]. - Market experts suggest that the tightening of liquidity is a result of the PBOC's efforts to stabilize the exchange rate and manage interest rate risks [2]. Group 3: Future Expectations - Some market analysts believe that liquidity is gradually shifting towards a more accommodative stance, with expectations for a balanced approach to monetary policy that supports growth and credit [3]. - There is an anticipation of increased government bond issuance, which may require a more accommodative liquidity environment to avoid high issuance costs [3]. - The PBOC may resume government bond purchases and expand reverse repo operations or consider reserve requirement ratio cuts to inject liquidity into the market [3][4].