From Reuters:
Chinese shorter-term bond and bill yields soared on Thursday after the central bank resumed one-year bill sales, that had been suspended for seven months, confirming to traders that monetary policy was being tightened. The central bank auctioned 50 billion yuan ($7.3 billion) of one-year bills in its regular open market operations at a yield of 1.5022 percent, above forecasts of around 1.40 percent and ranged between 1.30 and 1.50 percent.
Hmmm.
So why would China be looking to drain liquidity from the system?
Well, the announcement on one-year bills sales was actually made on Wednesday but came shortly after this news hit the tape:
Chinese banks made new loans totalling 1.53 trillion yuan in June, higher than the estimate of 1.2 trillion yuan given by state media and dwarfed May’s total of 664.5 billion yuan.
For the first half of the year, banks extended 7.37 trillion yuan in new loans, well above the minimum target of 5 trillion yuan set by the government for the year.
Related links:
Lex on China loan growth – FT
Chinese liquidity – and stocks – go BOOM! – FT Alphaville
More of China policy tightening – Reuters