Core Viewpoint - The People's Bank of China (PBOC) has resumed the operation of buying and selling government bonds in the open market, with a net injection of 20 billion yuan, indicating a shift in monetary policy to support the real economy and stabilize market expectations [1][4]. Group 1: Monetary Policy Tools - The PBOC's liquidity injection includes various tools, with a notable net injection of 20 billion yuan from government bond transactions, marking the resumption of operations that were paused earlier this year [1][2]. - The central bank's operations also include a net withdrawal of 24 million yuan from the Standing Lending Facility (SLF) and a net injection of 20 billion yuan from the Medium-term Lending Facility (MLF) [2]. Group 2: Market Conditions - The current 10-year government bond yield is around 1.8%, which has widened the yield curve, indicating favorable conditions for resuming bond transactions [5]. - The overall performance of the bond market is considered stable, which supports the decision to restart government bond trading [5]. Group 3: Economic Signals - The resumption of government bond trading is seen as a signal to stabilize macroeconomic operations for the fourth quarter of this year and the first quarter of next year [5]. - The PBOC's cautious approach is reflected in the relatively low net buying scale of 20 billion yuan, aimed at avoiding excessive influence on market expectations [5]. Group 4: Future Expectations - There is a possibility that the PBOC may increase the scale of net bond purchases in the future to counterbalance the pressure from other monetary tools maturing [7]. - The PBOC plans to conduct a 700 billion yuan reverse repurchase operation to maintain ample liquidity in the banking system, indicating ongoing support for the financial market [6].

Core Insights - The People's Bank of China (PBOC) reported liquidity conditions for July 2025, indicating a mixed approach to monetary policy with both net withdrawals and injections across various tools [1] Group 1: Liquidity Tools Overview - In July, the Standing Lending Facility (SLF) experienced a net withdrawal of 300 million yuan [1][2] - The Medium-term Lending Facility (MLF) saw a net injection of 100 billion yuan [1][2] - The Pledged Supplementary Lending (PSL) had a net withdrawal of 230 billion yuan [1][2] - The Short-term Reverse Repo recorded a net injection of 188 billion yuan [1][2] - The Buyout Reverse Repo also had a net injection of 200 billion yuan [1][2] - No open market transactions for government bonds were conducted in July [1] Group 2: Detailed Tool Performance - SLF: 14 billion yuan injected, 17 billion yuan withdrawn, resulting in a net withdrawal of 3 billion yuan [2] - MLF: 40 billion yuan injected, 30 billion yuan withdrawn, resulting in a net injection of 10 billion yuan [2] - PSL: 116.3 billion yuan injected, 346.3 billion yuan withdrawn, resulting in a net withdrawal of 23 billion yuan [2] - Other structural monetary policy tools: 41.76 billion yuan injected, 41.88 billion yuan withdrawn, resulting in a net withdrawal of 1.2 billion yuan [2] - Short-term Reverse Repo: 56.67 billion yuan injected, 54.787 billion yuan withdrawn, resulting in a net injection of 1.88 billion yuan [2] - Buyout Reverse Repo: 14 billion yuan injected, 12 billion yuan withdrawn, resulting in a net injection of 2 billion yuan [2] - Central Treasury Cash Management: 10 billion yuan injected, 12 billion yuan withdrawn, resulting in a net withdrawal of 2 billion yuan [2]

Core Viewpoint - The People's Bank of China (PBOC) has announced a significant operation of 1 trillion yuan buyout reverse repos starting from June 6, 2025, to maintain liquidity in the banking system, marking a shift in its usual announcement timing from the end of the month to the beginning [1][4][6] Group 1: Operation Details - The buyout reverse repo operation will be conducted with a fixed amount and interest rate bidding, with a term of 3 months (91 days) [1] - This tool, introduced in October 2024, aims to enhance liquidity management and cross-period adjustment capabilities within one year [1][5] - The PBOC has conducted multiple buyout reverse repo operations up to early June 2025, indicating a proactive approach to liquidity management [1] Group 2: Reasons for the Operation - The operation is primarily aimed at countering liquidity pressure, as 1.2 trillion yuan of reverse repos will mature in June [3][4] - It also serves to strengthen expectation management and policy transparency, with the PBOC breaking the convention of announcing operations at the end of the month [4][6] - The move is seen as a response to the high volume of interbank certificates of deposit maturing in June, which is expected to reach 4.2 trillion yuan, the highest monthly record [4][9] Group 3: Market Impact and Future Outlook - The announcement is expected to stabilize market expectations and maintain a reasonable liquidity level in the banking system [4][6] - Analysts suggest that the buyout reverse repo will complement the Medium-term Lending Facility (MLF) as a channel for medium to long-term liquidity [5][9] - The PBOC's actions are viewed as part of a broader strategy to support credit growth to the real economy and manage liquidity effectively [5][9]