Remember that extra 4.04bps China’s central bank added to its three-month bond auction last week?
On Tuesday, we are experiencing a redux — but this time it’s a full 8.29bps. Uh Oh.
The People’s Bank of China offered a yield of 1.834 per cent for the 20bn-yuan ($2.9bn) worth of one-year securities it auctioned on Tuesday, about 8bps more than the yield offered last week, and the first increase in 20 auctions (i.e since August).
But while last week’s extra yield sent markets into a (downward) frenzy as participants worried about imminent China-tightening, none of that panic seems to have emerged on Tuesday morning:
Perhaps markets are getting used to the idea.
Update: Another tightening move. From Market Watch:
LONDON (MarketWatch) — The People’s Bank of China will boost the yuan reserve requirement ratio for banks by 50 basis points, or half a percentage point, effective Jan. 18, the bank said in a statement on its Web site Tuesday. The ratio refers to the proportion of deposits banks are required to hold at the central bank.
Related links:
China PBOC conducts record repo drain, guides up 1-year yield – iMarketNews.com
Increase in China’s rates hits Nikkei – FT
The soap opera of China’s housing boom – FT