Key facts
- China's central bank reduced the size of its daily open-market operation to a record low.
- The move aims to absorb excess cash in the market.
- Benchmark bond yields reached their lowest level since August.
The People's Bank of China (PBOC) is taking steps to manage liquidity in the financial system. By reducing its open-market operations, the central bank signals a desire to absorb excess cash, potentially influencing short-term interest rates. This action coincides with a significant rally in the bond market, driving yields to multi-month lows, indicating strong demand for fixed-income assets.