China International Capital Co says implied rate-cut bets in interest-rate
derivatives surged after the October holiday to levels seen before prior PBOC
easing. One reason: the rapid fall in government bond yields since late
September did not trigger PBOC liquidity tightening. The report judges the PBOC
is more likely to ease by shifting the policy-rate anchor—keeping the
funding-rate center lower—rather than by blanket cuts to the 7-day reverse repo
rate and the LPR. That approach would likely cap further declines in government
yields; it probably would not affect outstanding loan rates, though new loan
rates could fall modestly. Expectations for next year’s fiscal policy stance
remain a key driver of government bond yield direction.
