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Key Points
China’s interbank market liquidity tightened in October to the highest level since January, with traders noting a large volume of maturing reverse repos and tax payments draining funds from the system, the latest MNI Liquidity Conditions Index showed.
Government policies to boost the economy continued to make a positive impact, with economic sentiment improving for the second month in a row.
- The MNI China Liquidity Condition Index hit 62.8 in October, up from September’s 52.6, with 46.2% of traders reporting tighter conditions.
- The MNI China Economy Condition Index jumped to 69.2 in October from 55.1 previous, marking the highest point since March 2023.
- The MNI China PBOC Policy Bias Index reached 33.3, down from 35.9 previous, with 66% of local traders expecting the PBOC will maintain prudent monetary policy and 33% anticipating further easing.
The MNI survey collected the opinions of 39 traders with financial institutions operating in China's interbank market, the country's main platform for trading fixed income and currency instruments, and the main funding source for financial institutions. Interviews were conducted from October 9 – October 20.
