China Bonds, Stocks, Commodities Extend Gains As Yuan Tumbles To One-Month Lows After Renewed Liquidity Injection

As China got back to work after Golden Week, it appeared a renewed exuberance appeared in every orifice of liquidity provision (even as PBOC sucked up excess for 6 straight days). Stocks are up, bonds are up, and commodities are soaring (all as Yuan tumbles) and tonight authorities unleashed 100bn reverse-repo (for the first time in 7 days) as leverage seems nothing to worry about again yields drop and asset prices rise.

As Bloomberg reports, China’s central bank restarted the use of an instrument that adds cash to the financial system, helping ease liquidity concerns before $153 billion of funds come due this week.

The monetary authority sold a total 100 billion yuan ($14.5 billion) of reverse-repurchase agreements, the first auction after a six-day pause, a statement posted on its website showed. While the open-market operations resulted in a net withdrawal of 90 billion yuan because of maturing contracts, the resumption signals that policy makers don’t want a sudden tightening of money supply, according to Bank of Tokyo-Mitsubishi UFJ (China) Ltd. The People’s Bank of China last week allowed 625 billion yuan of reverse repos to mature, mopping up cash after adding record funds in the days before the week-long Lunar New Year holidays. Some 900 billion yuan of the contracts are set to mature this week, as well as 151.5 billion yuan of loans under the Medium-term Lending Facility, data compiled by Bloomberg show. That adds up to 1.05 trillion yuan, or $153 billion.

“The PBOC restarted the use of reverse repos to stabilize market sentiment because large maturities are on the way,” said Li Liuyang, a Shanghai-based market analyst at Bank of Tokyo-Mitsubishi UFJ (China).

 

“The net result will probably continue to be a withdrawal this week, but the pace will be controlled to avoid any crunch. We also expect it to conduct MLF, given the maturities.”

And Lo and Behold - China soars...so much for all that worry about Trump trade wars!!

Stocks are up...

Bonds are up...

 

And every industrial commodity is exploding higher...

 

And all of this as the Yuan tumbles in a Trump-infuriating way... dropping to 5-week lows