Ample Liquidity Persists as Bond Market Rallies, Then Retreats

Funding rates continued to fall, and the bond market fluctuated after a series of gains. On October 15, the main contract of 30-year treasury bond futures hit a new high for the year at the opening, but accelerated downward near the close, falling below the 118-yuan level. Meanwhile, liquidity in the interbank market remained ample. As of the close on the 15th, the DR001 rate had dropped to 1.262%, down 0.38 basis points from the previous trading day and hitting a new low since May 19. Sources believe that easing pressure on bank liabilities and the central bank's increase in medium- and long-term liquidity injections together supported the bond market rally after the holiday. As tax payments, government bond settlements and month-end demand concentrate in late October, whether funding rates can stay low will be a key factor affecting the market going forward, and the pace of the central bank's liquidity injections and offsets deserves attention. (Shanghai Securities News)