More on the PBOC MLF cash injection earlier today

Earlier:

• PBOC conducts 650bn yuan one year MLF at an unchanged rate of 2.75%

ANZ:

• "The pressure from wealth management product redemptions and surges in interest rates on negotiable certificates of deposits (NCDs) indicated tight liquidity conditions," Xing said.

On that WMP comment, this from yesterday:

• FT says that "China’s zero-Covid retreat sparks wealth management product sell-off"

Many of the WMP had big exposure to China's bond market. The better news on reopening moves that sent share prices higher (bonds sold to fund purchases of risker assets) has triggered redemptions and WMP forced selling. To the extent that Chinese authorities have requested banks and insurers to buy the bonds being unloaded by WMPs.

The 650bn MLF more than offset the 500bn maturing. Which translates to a cash injection. This is aimed at boosting the ability to buy binds, but also:

• keeping liquidity ample towards year-end
• there is also some discussion of cash being made available into Lunar New Year (this seems a bit of a stretch IMPO, these holidays don't begin until 22 January 2023)