China drained the most short-term liquidity from the banking system in a year on a net basis as it reduced support after a week-long holiday. Government bond futures slid by the most since August.
The People’s Bank of China offered 10 billion yuan ($1.6 billion) of short-term funds to lenders, resulting in a net liquidity withdrawal of 330 billion yuan taking into account maturities. The operation broke a pattern where the central bank had added 100 billion yuan on a gross basis each day in the past five sessions.
