(Bloomberg) -- China’s central bank said it bought a net 200 billion yuan ($28.5 billion) of bonds from dealers in September, surpassing the amount of notes purchased last month.
The People’s Bank of China said in a statement the operation was aimed at keeping banking system liquidity reasonably ample, and strengthening counter-cyclical adjustments of monetary policy. The central bank didn’t specify the tenor of debt it purchased this month or when the operation took place. Last month, it bought short-tenor government bonds and sold long-tenor notes.
The central bank’s actions in the market have largely been overshadowed by recent events as a wave of stimulus announcements and reports on special sovereign bond issuance have brought the bond-buying frenzy to an abrupt halt. Yields on the benchmark bond rose as high as 2.26% earlier in the session on Monday, the highest since mid-July before easing ahead of a week-long holiday in China.
Less than a week ago, concern over a sluggish economy sent the benchmark 10-year yield below 2% for the first time on record. Traders were vigilant of central bank intervention, with authorities wary of how swings in US Treasuries contributed to the 2023 collapse of Silicon Valley Bank.
PBOC Governor Pan Gongsheng said the central bank will continue to punish “problematic acts” in the bond market as he outlined a barrage of stimulus measures that included reductions in some key interest rates to meet China’s 5% growth target this year.
The PBOC has started taking a more hands on approach to slow the bond rally after starting with verbal warnings earlier in the year. In July, it said it had “hundreds of billions” of yuan of the securities at its disposal through agreements with lenders — which was seen as a sign it was ready to sell them.
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