China Withdraws Cash From Banking System as Bond Sell-Off Cools

Covid outbreaks in China’s major cities and the rising fear of fresh curbs has hurt risk sentiment, boosting demand for haven assets and stabilize the bond market.

(Bloomberg) — China withdrew short-term cash from the financial system for the first time in nearly two weeks, as a sell-off in government and corporate bonds eased.

The People’s Bank of China net drained 2 billion yuan ($421 million) via its open-market operations on Monday, the first time since Nov. 9. It injected a total of 368 billion yuan last week via the tool, as onshore bonds got dumped by banks and fund managers due to retail investors’ redemption of their fixed-income assets.