Prices Over Quantities

China’s money markets will remain volatile in the coming weeks as the end-quarter liquidity squeeze approaches. The PBOC remains on an easing course, which should smooth seasonal liquidity tensions. The central bank is more focused on reducing real funding costs for the economy rather than using quantitative tools to boost liquidity. As a result, after short-term liquidity tensions fade, the steepening trend in yield curves should continue as China’s cyclical economic momentum improves.

Posted March 18, 2019
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