China One-Year Yields Rise for First Time Since August as Credit Tightens
BEIJING (MNI) - The People's Bank of China made its tightening intentions clear on Tuesday morning with the largest single liquidity drain via bond repurchase agreements and a rise in the yield on one-year sterilization paper.
The central bank began draining CNY200 billion via 28-day repos after 0900 Beijing time (0100 GMT), while CNY20 billion in one-year paper was sold shortly after 1000 at a yield of 1.8434% versus the 1.7605% that it had remained at since August 11 last year.
The much-anticipated rise in the one-year yield followed the slight increase in the yield on three-month paper at auction last Thursday, to 1.3684% from the 1.3280% that it remained at since August 13 last year.
The rise in the one-year yield was signaled by an increase in the volume of paper being offered up for auction, with today's CNY20 billion sale comparing with the average CNY13.9 billion sold each week in November and December.
It marked the largest sale of one-year paper since the CNY21 billion offered on November 10 last year. The repo drain is almost comparable with a 50 basis point increase in the commercial bank deposit reserve requirement, which would remove around CNY300 billion in liquidity from the market. |