On June 5, the central bank announced that in order to maintain the sufficient liquidity of the banking system, it would carry out a 100 billion yuan buyout reverse repurchase operation on June 6 in a fixed quantity, interest rate bidding and multiple price bids, for a period of 3 months (91 days).
It is worth noting that the central bank has carried out a buyout reverse repurchase operation for 8 consecutive months, each time disclosing the operation results at the end of the month. This is the first time to release the operation volume and operation period forecast of the buyout reverse repurchase business.
In this regard, Wang Qing, chief macro analyst of Dongfang Jincheng, told the reporter of Cailian News Agency that against the background of the current stable operation of the capital and bond market, the central bank broke the convention at the beginning of the month and announced large-scale reverse repurchase operations, which may be related to the fact that the maturity scale of bank peer-to-peer deposit slips continues to peak in recent months. This helps to keep the liquidity of the banking system in a sufficient state, control capital fluctuations, and stabilize market expectations.
The maturity volume of peer-to-pedest deposits in June reached a record high
According to the data of the central bank, from October 2024 to May this year, the central bank has carried out buyout reverse repurchase operations for eight consecutive months, ranging from hundreds of billions of yuan to more than one trillion yuan. Among them, in January this year, the central bank launched a buyout reverse repurchase operation of 1.5 trillion yuan; in February, the operation volume was reduced to 700 billion yuan; in March, it increased again to 1.1 trillion yuan; in April and May, it operated 600 billion yuan and 400 billion yuan respectively.
Open market buyout reverse repurchase adopts fixed quantity, interest rate bidding, and multiple price bids. The repurchase objects include government bonds, local government bonds, financial bonds, corporate credit bonds, etc. The operation target is a first-level trader of open market business. In principle, the operation is carried out once a month for a period of not more than 1 year. The operation results will be disclosed through the relevant columns on the official website of the Central Bank.
For this operation, Wang Qing said that in June, there were 500 billion 3-month and 700 billion 6-month buyout reverse repurchases respectively, which means that on June 6, the central bank will implement 500 billion 3-month buyout reverse repurchase operations, and in June The overall buyout reverse repurchase operation depends on whether the central bank has a new operation announcement at the end of the month.
“June is often a big credit month, and financial institutions have a large demand for funds. Bringing forward the buyout reverse repurchase operation time to June 6 will help financial institutions participate in bidding in time according to their own capital needs and make liquidity arrangements in advance. In early June, medium- and short-term liquidity was injected into the market through the buy-out reverse repurchase operation, which helped to maintain sufficient market liquidity at the end of the half of the year and better maintain the smooth operation of the financial market. Dong Ximiao, chief researcher of Zhaolian and deputy director of Shanghai Finance and Development Laboratory, told the reporter of Cailian News Agency.
Wang Qing further pointed out that after the central bank and other departments launched a package of financial policy measures on May 7, the current focus is to encourage banks to increase credit injection to the real economy and support the issuance of government bonds. At this stage, increasing the medium-term liquidity injection has released the policy signal of the continuous strengthening of quantitative policy tools, which is conducive to promoting the credit easing process and strengthening countercyclical adjustment.
In terms of capital, the large maturity of peer-to-pedest deposit in June is one of the main disturbing factors. According to Wind data, the maturity volume of peer-to-industry deposit orders in June is expected to reach 4.2 trillion yuan, setting a record for a single month in history. Among them, the first half and the middle of the month are the centralized maturity times, and about 920 billion yuan and 1.95 trillion yuan of deposit certificates will expire respectively.
The transition is smooth in terms of capital, and the downward space of the DR007 interest rate center is relatively small
Recently, the central bank has taken action to protect the liquidity of funds one after another, and the capital transitioned smoothly in early June. As of June 5, the Shanghai interbank interbank release rate (Shibor) was reported at 1.408% overnight, and the 7-day Shibor decreased by 0.9 basis points at 1.543%. Judging from the performance of the repurchase interest rate, the weighted average interest rate of DR007 fell by 1.5509%.
Wang Qing told the reporter of Cailian News Agency: “At the beginning of the month, the bank assessment node has passed, and the capital side has turned to relaxation. The decline in the interest rates of each term in early June is in line with the time-to-point law. Next, the central bank will comprehensively use medium- and short-term liquidity management tools such as mortgage reverse repurchase, MLF, and buy-out reverse repurchase to guide the liquidity of the banking system to be in a sufficient state.
Dong Ximiao expects that in the coming period, MLF will continue to shrink and continue, and the balance will continue to decline. The central bank will strengthen the adjustment of market liquidity through a variety of monetary policy tools and implement a moderately relaxed monetary policy.
The Fixed Income Department of CITIC Securities said that looking forward to June, the disturbance of financial factors on the capital side may weaken the margin. Considering that the scale of credit injection in June is usually relatively high under the background of the bank’s year-end assessment, the bank’s liabilities may also face certain pressure after a new round of deposit listing interest rates are adjusted and lowered, and it may be difficult to achieve a spontaneous balance in terms of funds. It is expected that the central bank will further inject medium- and long-term liquidity through buyout reverse repurchase, MLF and other means. In June, the overall capital side is still expected to maintain the balance of supply and demand, and the DR007 interest rate center may remain at a low level slightly higher than the policy interest rate.
Wang Qing believes that the cumulative maturity scale of the same-industry deposit in June is large, but it will not change the basic trend of steady decline in the maturity yield of the same-industry deposit. However, considering the current low yield of the bond market and the regulatory level still paying attention to the idling of funds and other factors, it is unlikely that DR007 will fall sharply and the monthly average will drop to 1.4% below the policy interest rate.
However, Wang Qing pointed out that, on the whole, the moderately loose monetary policy in the second half of the year has enough room, which will become an important support point to hedge external fluctuations, promote the reasonable recovery of price levels, and promote high-quality development. Generally speaking, under the combined effect of the above factors, there is still some room for market interest rates to decline in the second half of the year.
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