The central bank’s monetary policy has a sensible change in somatosensory change.

Following the restart of the Open Market Operation (OMO) on the previous day, on July 12, the central bank achieved a net investment of 20 billion yuan through OMO, the first net investment since the last 16 trading days. Faced with the liquidity pressure brought by multiple factors in the middle and late July, OMO turned the direction in time, indicating that the central bank maintains the basic stability of liquidity, and the funds are too loose and too tight to be sustainable. Combined with the further growth of the M2 growth rate in June, analysts believe that the monetary policy operation is more obvious from the focus on “not loose” to the emphasis on “not tight”. Monetary policy is harder than before and even marginal adjustment, but dominant Looseness is still difficult to see for the time being.

After the central bank’s implementation of the net return, the central bank’s open market operation was adjusted again this week. First, the OMO was restarted on the 11th, and the equivalent amount of hedging was expired on the same day. The purchase volume was implemented for the first time since the end of June.
On the early morning of the 12th, the central bank launched a 70 billion yuan reverse repurchase operation, including 40 billion yuan for 7 days and 30 billion yuan for 14 days. The winning bid rates were 2.45% and 2.60%, respectively, which were the same as the previous operation; After hedging the amount of 50 billion yuan due to return, the net investment of 20 billion yuan will be the first net release since June 20.
In order to prevent liquidity risks at the end of the half year, the central bank provided financial institutions with large-scale liquidity support in the first half of June. Statistics show that in the first half of June, the central bank accumulated a total of 1.36 billion yuan of reverse repurchase operations, a net investment of 540 billion yuan, and a net investment of 66.7 billion yuan through MLF operations. However, in late June, the central bank ended its net release and then turned to a net withdrawal. In the 16 trading days from June 20 to July 11, the central bank had a net return of liquidity for 13 trading days, and the remaining 3 days did not return and was not netted. Among them, the OMO operation was suspended from June 23. It was not restarted until July 11.
The central bank’s first-quarter monetary policy report pointed out that “in recent years, with the change in the mode of money supply, the central bank’s open market operations mainly use reverse repurchase and MLF, with the aim of “shaping the peaks and filling the valleys” and keeping the liquidity of the banking system basically stable. The liquidity of the banking system is prone to great ups and downs. "The intensity and pace of open market operations will also be flexibly switched. Sometimes, for the purpose of 'filling the valley', it will continue to operate with greater intensity, sometimes for the purpose of 'shaving peaks'. Continuous suspension or net withdrawal of liquidity, these are normal operational arrangements."
Looking back at the OMO since June, the central bank has provided sufficient liquidity support to financial institutions in the face of semi-annual liquidity fluctuations, which stabilized the market and investor sentiment. At the end of June, as the fiscal expenditure increased at the end of the quarter, the liquidity of the banking system continued. Ample, after the quarter, the money market once showed a situation of oversupply. The central bank reduced the liquidity and correspondingly implemented the net return operation, which reflected the regulation of “shaping the peak and filling the valley” and was a stable and neutral monetary policy. The required practice.

The multi-disturbance adjustment is expected to enter mid-July. With the cumulative effect of the continuous net withdrawal in the previous period, and the influencing factors of liquidity in the middle and the end of this month increase again, the liquidity supply and demand gradually converge to equilibrium, and the market re-emphasizes to the central bank. Adjusting the direction of the open market operation has been expected.
From the end of June, the central bank has recently “pumped” nearly 800 billion yuan, and “overweight” recovered the liquidity that was released through tools such as reverse repurchase and MLF in the first half of June. Starting this week, the market will enter the "large amount of money" period.
First of all, the pressure to return this week is still not small. According to statistics, there will be 280 billion yuan reverse repurchase due this week. In addition, 139.5 billion MLF expires on the 13th, and MLF continued to be a concern.
Secondly, this week's funds will face the impact of corporate tax payment. In the past three years, fiscal deposits in July increased by an average of 561.2 billion yuan. The tax levy in July is generally closed by July 15. The impact on liquidity may be mainly reflected this week.
Moreover, the recent increase in bond issuance will also have a certain impact on short-term liquidity. Since July, the supply of government bonds has accelerated. In early July, government bonds and local debts were issued 346.1 billion yuan, more than double the 160 billion yuan in late June. Judging from the information disclosed, the government bonds to be issued this week will further increase to 480 billion yuan. The impact of government bond issuance on liquidity is worthy of attention. At the same time, Guotai Junan (20.630, -0.09, -0.43%) convertible bond freezing subscription funds have just been thawed, the larger China Petroleum exchangeable bonds have been issued, and on the 12th, the offline inquiry and subscription deposit payment was made. The liquidity disturbance caused by the issuance of large-capital convertible bonds/exchangeable bonds in the short term cannot be ignored.
Finally, June and July of the year have always been the peak period for listed companies to distribute overseas dividends. The resulting demand for foreign exchange purchases will also have a certain impact on the liquidity of local currency.
Analysts pointed out that short-term liquidity has converge since this week, and the willingness to lend funds has declined. In the face of the liquidity supply and demand pressure brought by various factors such as seasonality and temporaryity in the next week or two, the central bank will re- Adjusting the OMO operation mode is also a good way to maintain the “peak clipping” operation.

From “not tight” to “relaxing”, there is a distance. When the liquidity is not too tight, the central bank will restart the net release in time, or it will trigger a monetary policy paranoia, especially after the central bank announced that the M2 growth rate will further decline in June. Add a look to the future monetary policy relaxation.
The central bank announced on the 12th that at the end of June, the broad money (M2) balance was 163.13 trillion yuan, a year-on-year increase of 9.4%. The growth rate dropped by 0.2 percentage points from the previous month and hit a new low since the data record. In 2017, the M2 growth target is preset to 12%.
The information reflected in the M2 data changes in June is basically the same as the 10% growth rate of M2 in May, which mainly reflects the impact of the de-leverage of the banking system on deposit derivation. After the release of the data in May, the relevant person in charge of the central bank pointed out that with the implementation of the stable neutral monetary policy and the gradual strengthening of supervision, the financial system actively adjusted its business to reduce internal leverage, which was reflected in its peers, asset management, off-balance sheet and shadow banking activities. The expansion of highly correlated commercial bank equity and other investment projects slowed down, and the resulting deposits and M2 growth rate also declined accordingly.
The probability of interbank assets loaded by the bank's “equity and other investment” subjects in June is still shrinking, as the fiscal seasonal deposits fall in June and the credit growth exceeds expectations, which has an upward driving effect on M2 growth. In this case, M2 growth rate The continued decline is also a drag on the changes in peer assets.
The growth rate of M2 continues to decline. On the one hand, it reflects that financial de-leverage continues to show results, and the need to further increase the pressure is correspondingly reduced. On the other hand, it also puts forward certain requirements for maintaining reasonable growth of money and credit. Researchers pointed out that although the M2 growth target is not a hard-constrained indicator, the M2 growth rate is the leading indicator of the economy. Its continuous deviation from the target value, especially the continued downward trend, may bring economic growth and inflation down, to a certain extent. Trigger the monetary authority to reverse regulation. According to the research report of CICC, historically, when the growth rate of M2 is significantly lower than the target value, most of them will see the relaxation of regulatory policies.
In fact, some adjustments have been made to the monetary policy operation of the central bank in the near future. At least market participants have clearly felt the change in the “sense” brought about by monetary policy. Since May, liquidity has remained stable and even slightly loose is the most obvious proof. Concerns about continued tightening of monetary policy and liquidity have declined significantly.
It should be said that in the current situation of moderate inflationary pressure, financial de-leverage, and large-scale domestic and international spreads, monetary policy is harder than before, and may even be marginalized. However, economic growth still has inertia, and new June. Higher credit growth also shows that financial, especially credit, support for the real economy is still relatively large. The loosening of overseas monetary policy has gradually become a general trend, and it also restricts the space for China's monetary policy to relax. At this stage, explicit easing is still difficult. see.

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