The central bank of China provided massive liquidity to the financial sector, utilizing overnight reverse repos to supply 1 trillion yuan to the banking system on each of the dates from Oct 28 through Oct 30. This expansion of available capital coincided with a decline in the borrowing cost for sovereign debt, with the yield on the nation’s 5 year government bonds falling to an unprecedented low.
In addition to the overnight operations, the PBOC conducted 7 day reverse repo injections, including 151 billion yuan on Oct 28 and 115 billion yuan on Oct 29. The central bank maintained the rate for these shorter term loans at 1.40%.