China's central bank has opened a fourth overnight lending window since June, and on the four days the last one ran, its seven day facility took nothing at all
The notice went out to China's primary dealers at five o'clock on Monday evening and runs to one sentence.
From 27 August to 1 September, the People's Bank of China will conduct overnight reverse repurchase operations, at a fixed rate, by quantity tender, with a daily volume not exceeding 600bn yuan. The stated reason is to better match the short-term liquidity needs of the banking system. That is the whole of it. The document is in Chinese and the rendering here is this desk's own.
It is the fourth such notice since June.
The sequence
Announcement No. 4, on 25 June, added overnight operations to the open market business of 29 and 30 June, two days, with no ceiling written down. No. 5, on 24 July, covered 29 to 31 July and 3 August and fixed the amounts outright: 600bn yuan on each of the three July days, 300bn on 3 August. No. 6, on 12 August, covered 14 August and 17 to 19 August with a ceiling of 600bn a day rather than a fixed amount. Monday's covers a continuous six-day span.
Four windows in two months. The newest is the first to run into a following month.
The opening clause about short-term liquidity is word for word identical in all four, and no notice offers any other reason.
What happened on the days the last window was open
The Bank publishes a separate report on every day's operations, and the four covering the August window say the same thing four times.
On 14 August, bids for the seven day facility came to zero and the allotment was zero. The Bank conducted 349.0bn yuan of overnight operations instead. On 17 August: seven day zero, overnight 565.5bn. On 18 August: zero, and 469.7bn. On 19 August: zero, and 327.4bn.
That is 1,711.6bn yuan of overnight money across four days, on our addition of the Bank's figures, with nothing at all taken at the seven day tenor. The largest day, 565.5bn, is 94.25 percent of the ceiling the Bank had set.
Then the window shut and the seven day facility started up again, at 1.40 percent: 95.0bn on 21 August, 340.0bn on 24 August, 386.0bn on 25 August and 239.5bn on Wednesday. Each of those four reports states that primary dealer demand was met in full.
One number that is not in any of these documents
The rate on the overnight leg.
The daily reports print a rate for the seven day operation and print the overnight operation as a volume, with no rate beside it. Four notices and four daily reports were read for this item and none of them carries one. Anyone pricing off this has the tenor, the ceiling, the dates and the take-up, and does not have the price.
