Chinese Money Market Yields Rise, One Fund Has 24pc Annualized 7-day Yield

This money market fund 嘉合货币B now has a 24 percent annualized 7-day yield. The chart and table shows the soaring 7-day yield over the past few days.

An article in iFeng asks: what happened? iFeng: 货币基金七日年化收益率飚至20% 发生了什么?
Even more impressive is the performance of individual funds, such as the Jiahe B currency has a 7-day annualized rate of return reached 20.8960%, in the 27th of the market-wide Monetary Fund ranked first. In the past month, the fund's yield has not more than 6%. But nearly three days of the rapid rate of return of its soaring, December 26, the fund's yield reached 16.272%, 27, further rise.

In addition to Jiahe currency, the Dacheng Feng Treasure Monetary Fund 7-year annualized rate of return is also more than 7%, Industrial stability days surplus currency, the people's livelihood plus silver Teng ingot currency, SDIC Swiss money money Treasury 8 Fund seven The annualized rate of return of more than 5%, investment wealth Po transaction currency, Merchants Zhao Jinbao currency, BOC securities cash stewards currency 62 money fund yield between 4% -5%, and another 173 funds The yield is between 3% and 4%.

Short-term financial funds is also very optimistic about the rate of return. December 27, there are nine short-term financial funds of the seven-day annualized rate of return of more than 4%, of which agricultural silver 14 days of financial B reached 4.7%, 4.48% and so on.
The iFeng doesn't see trouble so much as a "liquidity war" as money market funds jockey for investor funds:
"Monetary Fund's capital flow improved mainly from two aspects.On the one hand, the agency's large redemptions in the first two weeks has been completed, the Fund's passive pressure to reduce the basic release of leverage in this case, as long as the bond market a little stabilized , The Fund has a lot of motivation to increase short-term high-yield varieties, especially the high market returns, is very suitable for the Fund, but also very attractive.

On the other hand, more than one fund channel sources confirmed that the amount of money in the first-line bank retail sales began to rise in the last week of the end. Product yield recovery is one reason, and the other is due to retail customers, the Fund's higher security and competitive varieties of lower earnings side by side, triggering the continued inflow of funds.

In other words, when other non-bank institutions in the exchange and the interbank market staged a "war of funds" at the same time, with unimpeded retail channels of the Monetary Fund, with individual investors "ammunition" began to return to the market, a liquidity Of the suppliers. This identity advantage gives the IMF an excellent opportunity to increase its yield.
Bloomberg isn't as optimistic about the yield spike.

Bloomberg: China’s Money Market Pain Is About to Get Worse
China’s money-market liquidity squeeze is about to get worse.

...“The central bank’s attitude towards monetary policy has changed fairly significantly in the past six months,” said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen. “Market participants are anxious as the tightness at year-end is worse than expected. Tougher monetary conditions and deleveraging are having the same negative impact on domestic liquidity.”

...“Liquidity will be the biggest risk next year,” said Ming Ming, head of fixed-income research at Citic Securities Co. “Smaller financial institutions will face more difficulties in borrowing and the cost will be higher. The big picture in 2017 is de-leverage, so the monetary policy will be neutral to tight -- this is negative to the bond market.”

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