Key Points – May Report
Liquidity tightened to a modest degree I the latter part of the month, pressured in part by increased local government bond issuance and the drain of the tax season, the latest MNI Liquidity Conditions Index shows.
The Liquidity Condition Index stood at 30.0 in May, edging up from the 14.3 recorded last month but still far below the breakeven level. The lower the index reading, the looser liquidity appears to survey participants.
- The Economy Condition Index improved from the April level, with 60% of respondents seeing a pick up from the previous month.
- The PBOC Policy Bias Index was little changed, with the central bank's policy seen by most as remaining 'prudent'.
- The Guidance Clarity Index was just a touch lower, with the central bank still seen giving clear indications of its intentions, as traders recognize the PBOC's communicating efficiency to both banks and institutions whilst maintaining policy transparency
The MNI survey collected the opinions of traders at financial institutions operating in China's interbank market, the country's main platform for trading fixedincome and currency instruments, and the main funding source for financial institutions. Interviews were conducted between May 11 and May 25.
