China Crushes Leveraged Traders With Liquidity Withdrawals
- Central bank drains $23 billion of funds from financial system
- Spread between bond yield and key money market rate shrinks
Photographer: Qilai Shen/Bloomberg
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China’s central bank is winning the battle against leverage, yanking billions of funds from the financial system and crushing a popular trade in the bond market.
The People’s Bank of China drained a net 150 billion yuan ($23 billion) of funds on Thursday using open-market operations, the largest such amount since October. That adds to its 178 billion yuan withdrawal from the past two days, and comes after the central bank unexpectedly mopped up medium-term liquidity earlier this month.