PBOC Injects Cash Despite Flush Liquidity, Fueling Bond Rally

China’s central bank has injected more cash into the banking system, signaling unusual tolerance for abundant liquidity and boosting confidence that the bond rally may have further to run.

The People’s Bank of China added a net 9.5 billion yuan ($1.4 billion) using seven-day reverse repos on Tuesday and Wednesday, the most since late March, data compiled by Bloomberg show. While the injection amount was small, it surprised traders as the system already appears flush with liquidity, with money-market rates near three-year lows.