China’s central bank unexpectedly injected 1 trillion yuan (around $139 billion) in three-month cash via outright reverse repos on Friday, a break from its usual practice of conducting such operations at the end of the month. The move appears aimed at easing mounting concerns over interbank liquidity, as borrowing costs rise and financial stress builds ahead of a heavy month of debt maturities.

Xiaojia Zhi of Crédit Agricole CIB said the sizable and early injection signals the PBOC’s intent to calm market nerves, particularly with banks facing a record 4.2 trillion yuan in negotiable certificates of deposit (NCD) repayments in June. The operation came ahead of government bond auctions later in the day, following a recent 50-year bond sale that saw yields rise for the first time since 2022. Wang Qing of Golden Credit Rating added that more liquidity support is likely in June, as the central bank continues to push banks to increase lending and facilitate smooth government debt issuance.

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We knew something was going on but not what it was….

Pan Gongsheng, People’s Bank of China governor

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