China's 3-year central ticket price rises still show liquidity withdrawal pressure

Xinhua Beijing, April 22 (reporter Huayadi Shen Mo Zi) The central Bank of China 22nd in the open market tender issued 90 billion yuan 3-year central vote, which is 3-year central vote since the April 8 restart since the two-degree issue, circulation up to the last 6 times times.　　At the same time, the price of the issue rose unexpectedly, the interest rate set by the tender was 1 basis points to 2.74%.　　Hongyuan Securities Senior Researcher He Yi analysis that the 3-year central vote issued "rising prices", on the one hand, highlighting the liquidity of the return pressure is still large, on the other hand, reflects the market institutions for the 3-year central vote demand is very strong. At present, the industry generally believe that the liquidity return pressure is still large. Guo Qin, an analyst at Citic Securities, said that despite the March trade deficit in China, still growing foreign exchange reserves, especially hot money inflows, have increased the pressure on the open market to return.　　In the first 3 months of this year, China's foreign exchange reserves increased by 16.1 billion, 9.4 billion and 22.5 billion dollars respectively.　　However, in the past few weeks the central bank net withdrawal strength has been significantly reduced: from the two weeks after March, 213 billion yuan, 218 billion yuan gradually fell to April before two weeks of 163 billion yuan, 110 billion yuan, and then steep to 14 billion yuan last week, once prompted the market for the reserve ratio to increase the expected rise.　　Xu Xiaoqing, executive general manager of the fixed income division of CICC, believes that the gradual decline in net returns is a return to normalization of returns, the 3-year central votes issued volume, resulting in net return again, conducive to stabilizing market sentiment.　　The same day, the central bank also in the open market tender issued 23 billion yuan March, the circulation was significantly reduced by 45 billion yuan last week, and carried out a 35 billion yuan repurchase operation, thus, this week to achieve a net return of 65 billion yuan, much higher than last week's 14 billion yuan.　　To their surprise, the 3-year central-issue interest rate was dropped in the day of the bid, after the market generally expected the 3-year central issue rate will be flat at 2.75%. "The drop in prices underscores the demand for 3-year central votes for market institutions.　　"He said that the current 3-year central votes yield ratio of 1 years higher than nearly 80 basis points, at an all-time high." A large Shanghai state-owned bank trader has confirmed to reporters that the bank's current allocation needs are strong and that the 3-year central vote yield is attractive.　　Another City Commercial bank trader is candid, even if the price is a little higher, such as the yield is low to 2.73%, they can accept. Market participants here commented that the increase in the price is mainly due to market demand, open market operations are usually reported by a first-tier dealers demand, the central bank in accordance with the demand situation to determine the circulation and issuance of interest rates; In addition, to some extent, the central bank intends to let the 3-year issue of the market more　　Easy to improve the open market operations targeted. Another concern is that open market operations show "short-term" signs of "long-term". Data show that the circulation of 1-year central votes has dropped from 100 billion yuan in mid-March to the recent 40 billion yuan, while the March CentralThe circulation of tickets from the late March to 160 billion yuan back to 23 billion yuan this week, and 3-year central votes from 15 billion to 90 billion yuan to form a sharp contrast.　　He said that the open market operation "growth period" "shortened period", highlighting institutions for the 3-year central vote preference for more than a short period of variety, 3-year central votes are expected to play a greater role in the recovery of liquidity. Li Huiding Securities senior analyst, said that the 3-year central vote is very attractive, the future open market operations may be biased towards the 3-year central vote.　　He cautioned that, as the 3-year issue of the central vote can play a significant role in the withdrawal, with the increase in the withdrawal, its tightening marginal effect on the capital of the accumulation of qualitative changes will gradually release, the future does not exclude market funds face tightening expected to emerge again. It is noteworthy that the 3-year central vote of 90 billion yuan is less than the total demand reported by the market institutions to the bank, this may also reflect the regulatory level for a more substantial increase in the 3-year issue of the central vote still remain worried, after all, its shrinking capital cycle longer, less flexibility, and revealed a stronger regulatory signal.