China’s Overnight Rate Halts Longest Losing Streak in 11 Months

China’s overnight money-market rate rose, halting a 10-day loss that was the longest losing streak in 11 months, as the central bank drained more funds.

The People’s Bank of China sold 100 billion yuan ($16.4 billion) of 14-day repurchase agreements at 3.8 percent today, according to a statement posted on its website. The monetary authority withdrew a net 108 billion yuan last week via two separate repo auctions, the first time it’s used such agreements since June.

The overnight repo rate, a gauge of funding availability in the banking system, climbed eight basis points to 1.72 percent as of 4:30 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The benchmark seven-day repo rate fell five basis points to 3.22 percent, after earlier reaching 3.19 percent, the lowest level since July.

“The PBOC is stepping up efforts in open-market operations as current rates are deemed too low,” said Song Qiuhong, an analyst at Shunde Rural Commercial Bank Co. in Guangdong province. The current “ample funding” could be a further sign that the economy is slowing down, he said.

Data due on March 1 may show the official Purchasing Manager’s Index of manufacturing fell to 50.1 in February, the least since June, according to the median estimate in a Bloomberg survey. A reading below 50 signals contraction.

A preliminary PMI released by HSBC Holdings Plc and Markit Economics last week showed factory output contracted in February by the most in seven months.

One-year interest-rate swaps, the fixed payment to receive the floating seven-day repurchase rate, dropped 14 basis points, or 0.14 percentage point, to 4.5 percent, according to data compiled by Bloomberg. It reached 4.46 percent earlier, the lowest since Nov. 27.

Ten-year government bonds rose for a fifth day, with the yield on the 4.08 percent notes due in August 2023 falling eight basis point to 4.43 percent, data from the National Interbank Funding Center showed. That was the lowest level since Nov. 29.

— With assistance by Helen Sun

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