Central Bank Expected to Act Early in September to Maintain Ample Liquidity

　　The liquidity gap in September has drawn significant market attention. On one hand, the scale of open market operations maturing in early September has increased substantially; on the other hand, factors such as medium- and long-term fund maturities and accelerated credit issuance have caused disturbances. Experts believe the central bank is expected to take action in early September to maintain ample liquidity, with the central money market rate likely to remain below the policy rate.

　　Although liquidity pressure is relatively high in early September, supportive factors remain. On one hand, fiscal expenditures at the end of August are expected to seasonally ease liquidity conditions this week; on the other hand, the scale of government bond payments this week is small, limiting their impact on liquidity.

　　“Looking back at August, a large volume of reverse repos matured at the beginning of the month, but seasonal easing factors still dominated,” said Xiao Jinchuan, Chief Macro Analyst at Huaxi Securities. Given the current monetary policy stance and the central bank’s outright reverse repo operations on the first Fridays of June and August, if the central bank continues such operations this week as expected, liquidity conditions are likely to remain loose.

　　Throughout September, liquidity conditions will face multiple disturbances. Jin Yi, Chief Fixed Income Analyst at Guohai Securities, stated that considering factors such as medium- and long-term liquidity maturities, government bond issuance, fiscal revenues and expenditures, and credit expansion, a liquidity injection of approximately 784.5 billion yuan is needed in September.

　　Regarding medium- and long-term liquidity, Sun Binbin, Chief Economist at Caitong Securities, noted that 1.6 trillion yuan in medium- and long-term liquidity is set to mature in September, including 1 trillion yuan in 3-month outright reverse repos, 300 billion yuan in 6-month outright reverse repos, and 300 billion yuan in medium-term lending facilities (MLF).

　　From a non-seasonal perspective, Tan Yiming, Chief Fixed Income Analyst at Tianfeng Securities, highlighted the need to monitor non-seasonal factors. On one hand, a stronger equity market and improved risk appetite may continue to drive fund reallocation across asset classes; on the other hand, the year-end credit expansion push may be more pronounced than in previous years, as seen in cross-quarter months during the first half of this year.