A blog on Chinese economy & society

Failed bills auction in China

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All eyes on the dramatic beginning of the end of the euro these days, that few seem to take note of the second failed bills auction in China in a month. The Finance Ministry sold only 97% of its planned RMB20bn sale of 273-days bills, at an average yield of 1.72%, compared to 1.54% at the previous auction.

It’s interesting that the Bloomberg story pinned the cause of the failure at liquidity shortage, as the PBoC raised reserve ratio for the banks earlier this month. I guess this is another way of framing the issue. A more direct explanation is that the market is expecting some sort of rate hike and 0.18% increase in yield is not deemed adequate to cover the risk.


Written by Cindy Luk

May 14, 2010 at 8:41 pm

Posted in China, Macro

Tagged with , ,

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