Halister News

(Bloomberg) -- PBOC should keep monetary policy neutral and prudent through more precise monetary management tools including OMO, medium-term lending facility and supplementary lending, Citic Securities head of fixed income research Ming Ming writes in a note today.

• That will support reforms and the economy better than broad- based easing, which would increase yuan depreciation pressure and enlarge asset bubbles in financial markets: Ming
• Overheated domestic bond market would cool down as further easing unlikely
  • In longer term, recovering economy would fuel inflation which would prevent a further decline in yield
  • Expects yield of 10-yr govt bonds to bottom out at ~2.8%
• Yield of 10-yr govt bond rise 2 bps to 2.79% today. The yields were more than 3.5% last August
• NOTE: PBOC yesterday reiterated that it will maintain prudent monetary policy in 2H, and keep liquidity at reasonable ample level. Statement came after NDRC researchers called for rates and RRR cut in the morning
  • PBOC says to keep yuan exchange rate basically stable at equilibrium level, to keep reasonable growth of credit & aggregate financing. Plans to lower cos. financing costs by optimizing financing and credit structure
  • NDRC updated note Wednesday afternoon and deleted previous call for further easing