Although at the end of the month, the central bank still withdraws funds from the open market, stimulating market cautious expectations of liquidity. Insiders pointed out that the fiscal expenditure at the end of the month formed a liquid supply, but the central bank continued to return to the net to limit the liquidity recovery, and the capital fabrics crossed the moon in a tightly balanced pattern.

Implemented a net withdrawal for six consecutive days

On the 28th, the central bank launched a 100 billion yuan reverse repurchase operation, including a 7-day period of 60 billion yuan and a 14-day period of 40 billion yuan. The amount of funds is half of the amount of funds returned on the day, so the central bank will still return 100 billion yuan. For the sixth consecutive trading day, the net liquidity of liquidity was implemented, and the net return volume in the last three days reached 100 billion yuan.

In the past few months, in the middle of the year, the central bank generally carried out a net liquidity of liquidity, which was to “fill the valley”. In the latter part of the year, it was converted into a net return, which was “shaping the peak”. The same was true in August. From August 12 to 18, the central bank implemented a net investment of 222 billion yuan through OMO. Last week (August 19 to 25), it turned to a net return. However, since last week, the market has been funded. Without leeway, in this context, the central bank’s insistence on a net return of liquidity is still somewhat unexpected.

The central bank's bottom line comes from the judgment of the rhythm of fiscal expenditure and the monitoring of changes in the total liquidity. On the 28th, the announcement of the central bank's open market business transaction pointed out that "considering that the fiscal expenditure at the end of the month can hedge the central bank's reverse repurchase maturity and other factors, in order to maintain the liquidity of the banking system is basically stable, the People's Bank of China will pay interest rates on August 28, 2017. The tendering method carried out a 100 billion yuan reverse repurchase operation."

Fiscal expenditure is the process of transferring fiscal funds from the national treasury to commercial bank deposits, which will form a liquidity supply in the banking system. From the past years, most of the fiscal deposits in August were net. Looking back, with the increase in fiscal expenditure at the end of the month, the high probability of the most liquidity phase in August has passed, which is where the central bank continues to implement a net return.

However, at the end of the month, there were many factors influencing the funds, and the short-term funds were not loose. The central bank continued to implement large net withdrawals, which further stimulated the market's cautious expectations of liquidity.

Difficult to get out of tight balance

According to statistics, as of the 28th, in August, the central bank has accumulated a total of 278 billion yuan of net withdrawal funds through OMO. According to the current operation intensity and the recent withdrawal of funds, the possibility of net withdrawal of funds for the whole month is not small, so it will end OMO since April. Continuous net delivery since.

From April to July, the central bank implemented liquidity net investment through OMO for four consecutive months. This is regarded as important evidence that the central bank's monetary policy has returned slightly from the previous neutrality to “not tight”. Under this background, the central bank's net withdrawal in August has once again increased. OMO is likely to have a net return in the whole month, which will inevitably have an impact on market expectations.

The industry believes that the recent increase in liquidity of the central bank's liquidity may be considered in two aspects. First, the exchange rate of the renminbi against the US dollar has appreciated. After the traditional peak season for foreign exchange purchases, the pressure on foreign exchange losses has been further reduced. Regaining growth, correspondingly, the pressure on the central bank to actively launch the base currency has been alleviated; second, to maintain financial de-leverage results, maintain the necessary liquidity pressure, and avoid regaining leverage. In July, the equity and other investment items in the credit balance sheet of the deposit-taking company reappeared significantly. This subject was mainly loaded with the interbank assets of the bank; the size of the money fund continued to expand rapidly in July, which increased by 751.7 billion in the month. Yuan; the chain of "property-coexistence" of the same industry expansion has signs of re-expansion, or caused the supervision layer to be vigilant.

However, many institutions believe that it is unlikely that the current monetary policy will be further tightened. Zhao Yuhua, chief strategist of CITIC Capital, pointed out that from the recent operation of the central bank, it is still a stable and neutral pattern. The recent tension is not the initiative of the central bank, but the entire liquidity system is too fragile. Huang Wentao, chief analyst of the macro-receipt of CITIC Securities, also said that the monetary policy in the second half of the year will still volatility around the main line of financial supervision, and truly maintain a stable neutral.

Insiders pointed out that in combination with the policy orientation of monetary policy, the tightness of liquidity will not last long, but it will not break away from the tight balance. Taking into account the increase in fiscal expenditure at the end of the month, the central bank may continue to hedge, and the capital fabrics will cross the moon in a balanced and tight manner.