The Central Bank Can't Even Wait 7 Days—Firefighting Day by Day! What Pan Gongsheng Is Guarding Against Isn't Rates, It's Volatility! Banks' 100 Trillion in Bonds Survive on Rolling Overnight Repos! Active ETFs Aren't New Money—They're Just Pumping Trading Volume! Three Bombs Shove the Risk onto Companies, Creditors, and Retail Investors! 50% Chance of a Bond Market Stampede Within a Year!

The central bank of the CCP has recently anchored policy interest rate operations to the overnight repurchase spread, suppressing bond market volatility through intra-day firefighting and setting rules for high-grade collateral. Meanwhile, the launch of active ETFs aims to pad trading volume rather than bring in incremental capital. Furthermore, the dual-track loan interest rate system and the exit of the judicial benchmark interest rate further transfer risks and costs to corporate balance sheets, low-rated bondholders, and unpaid creditors. The risk of a stampede in the bond market over the next year is extremely high.

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Observe things as they truly are, and reject fragmented perception. Just the afternoon before yesterday, a forum was held on Financial Street in China. Pan Gongsheng came up and spoke about four main things: studying the shortening of the policy interest rate term from seven days to overnight; second, establishing liquidity support tools to cope with large redemptions by non-bank financial institutions; third, having large corporate loans switch to anchoring this overnight repo rate; and finally, exiting the deposit-loan basis rate. On the very same afternoon, the CSRC chairman Wu Qing, that fucking idiot, announced that the registration of the first batch of 18 active ETFs was approved on the same day. Today, let's take a look at the CCP's engineering project to suppress asset volatility, as well as what kind of financial risks lie behind the CCP's launch of these financial instruments. Furthermore, let's look at how a financial system that survives on suppressing volatility passes the cost of defense layer by layer to corporations, creditors, and retail investors once incremental capital dries up. Let me state my conclusion right here: this combination of moves is not a generous gift pack; it is an extreme defense project. What it defends against is not the level of interest rates, but the volatility of interest rates. And who are these costs dumped onto? They are dumped onto corporate balance sheets, low-rated bondholders, unpaid creditors, and finally, A-share retail investors. The data all comes from the CCP's primary sources, which you can verify yourselves. The starting point for our content today begins with that very sentence Pan Gongsheng himself admitted.

What did he say? He said that the interbank overnight repo rate—yeah, that lending rate between banks overnight, technically known as DR001—has effectively become the central bank's target rate for monetary policy regulation. The primary operating instruments and policy rates are still anchored at the seven-day tenor, but the two are not entirely identical. Let me translate what this guy is actually saying, okay? What this fucking idiot really means is: the central bank admits that the nominal seven-day policy rate no longer works. The actual interest rate anchor that the market is watching moved to overnight a long time ago. This means the CCP's People's Bank of China now has to suppress not only the spatial volatility of interest rates, but also the entire term structure of debt portfolios. Let me briefly explain the mechanism here. What Pan Gongsheng wants to do right now is control the spreads between bonds of different maturities. His words also exposed another piece of information—what is it? It's that the entire leverage chain of Chinese banks is now completely surviving on rolling overnight funds. Previously, the spread between seven-day and overnight was over 20 basis points; now, that 21 basis points has been compressed down to 2 basis points, and even those two basis points were traded out by the banks themselves. But starting today, the CCP's central bank must pin it down right there and not allow it to bounce back. Because once maturity spreads reappear, the holding costs nested in using overnight rolls to fund long-term debt will spike, which in turn will cause interest rates to spike along with them. So the CCP's People's Bank of China not only has to manage the ups and downs of this overnight rate, but also the shape of the entire yield curve. As everyone can see, the tenor of this interest rate suppression is getting shorter and shorter. In June 2024, at the Lujiazui Forum, he was still saying that the seven-day rate was essentially serving the function of the main policy rate. Two years and four months later, it shortened from seven days down to overnight. So how did the seven-day tenor die? Let's look at the data: the spread between the seven-day and overnight rates shrank from 21 basis points last December—meaning if you borrowed money for six more days, the market made you pay 21 basis points more in interest. By January this year, it narrowed to 17 basis points, 12 in April, 7 in June, and in August and September only a 2-basis-point spread remained. This shows that basically no one was borrowing seven-day money anymore. On October 15, overnight repos saw a turnover of 7.3 trillion yuan, while the seven-day volume was a mere 0.8 trillion yuan. The liability side of China's entire interbank market has already turned into a one-day market. Pan Gongsheng switching to overnight now isn't about designing a new framework; he is completely just following the existing balance structure.

What was this structure like before? The central bank injected seven-day liquidity and set a weekly average price. Non-bank institutions, however, were borrowing one-day money, and interest rates would often spike suddenly on any given day. This resulted in seven-day money failing to control one-day events. After shifting to injections on an overnight basis, it turned into releasing money whenever the rate spikes on a given day, and then reclaiming it the next day. Big banks lend money to non-bank financial institutions at this price, so the borrowing rate for non-banks on that day is nailed directly to the central bank's overnight rate. You understand this chain now, right? Speaking of non-bank institutions, let's first clarify who non-banks are. Non-banks refer to financial players outside of commercial banks, such as wealth management firms, mutual funds, brokerages, and private capital pools. A large portion of the money in the interbank market is lent by big banks to non-bank institutions. Therefore, there is another spread that is even more crucial: the premium that the non-bank overnight borrowing rate (R001) carries over the interbank DR001. Last December, that premium was 8 basis points; by August this year, it had also been squeezed down to 2 basis points, marking an all-time low. Some interpret this as abundant liquidity for non-banks, but my reading is the exact opposite—because right now, this thing is like a spring stripped of any cushion, its marginal benefit squeezed dry. In fact, a rehearsal already occurred in June this year. Let's keep looking at the data. The stock of funds lent out by big banks was 4.04 trillion yuan on May 28 this year, and around June 9 it plunged straight down to 2.86 trillion yuan, without any change in overall monetary policy during that period. What does that mean? It simply means the big banks had less money on hand, and then the interbank overnight rate surged from 0.23% at the beginning of the month straight past 0.4%, breaking above the policy rate ceiling. So think about this: when big banks reeled in that 1 trillion yuan in lending, non-banks were backed into a corner. That is the real reason why the anchor had to shrink to one day: because if big banks lend 1 trillion less, these bastards in wealth management and mutual funds who borrow overnight money every day suddenly can't borrow anything. So the interest rate jumps on the day, leaving the central bank with no choice but to change the anchor to a day-by-day pin.

So some friends might ask, why not just remove this leverage directly, instead of shortening this policy anchor to cater to it? Because the CCP's PBOC sees it very clearly itself. In the CCP central bank's monetary policy report this May, it was written very clearly in black and white: excessive leverage by non-bank financial institutions and maturity mismatch are major factors triggering risk. Knowing that this is a landmine, why not dismantle it? Because they simply can't dismantle it. What to do if it can't be dismantled? They can only protect it. Let me tell everyone why it can't be dismantled. Right now, commercial banks hold over 100 trillion yuan in bonds, which already accounts for a quarter of the total assets of banks. The scale of bank wealth management products (WMPs) has also reached 33.5 trillion yuan, with fixed-income products accounting for 96.5% of the total wealth management scale. Even more aggressive is that the proportion of public funds in wealth management assets rose from 2.9% early last year to 7% at the end of June this year, with the scale reaching 2.52 trillion yuan. And this is already the latest data available; the Q3 wealth management report won't come out until late October. What are those wealth management bastards doing? They outsourced more than two trillion yuan in duration exposure to bond funds, forming a very interesting structure: a double-nested structure where wealth management holds bond funds, and bond funds hold long-term bonds. To put it plainly, ordinary people give their money to wealth management, wealth management turns around and buys bond funds, and bond funds use that money to buy 10-year or 20-year long-term bonds. The money passes through three hands and ultimately ends up pressed into the longest-term bonds, while the ordinary people at the front can hit redeem at any time. However, the duration of interest rate bonds has now been stretched to over five years, and the leverage of this chain is renewed on the overnight market. In other words, they pledge their long-term bonds to major banks to borrow money for one day, and then use the borrowed money to buy more long-term bonds. When it matures the next day, they pledge again and borrow for another day, doing this every single day. The resulting outcome is that the long-term bonds lie completely still, while the borrowing end has to restart the process every day. Once this process reverses into panic selling, it won't be measured in weeks, but in days. Truth be told, this was fucking brought upon themselves by the CCP. Why? Because CCP commercial banks created an arbitrage space between bill discounting and deposit interest rates, for the purpose of propping up embarrassing financial figures. This is a microscopic financial loophole, and those with arbitrage qualifications—like those fucking Huawei-affiliated pieces of shit—are all inside madly engaging in arbitrage. Let's see what happens if this chain snaps. In fact, it happened back in 2022. On October 14, 2022, China's 10-year Treasury yield rose by 10 basis points in a single day, and wealth management subsequently saw consecutive net sales for 9 to 10 weeks. So the clock of the entire stampede was set on that very day and the next, while the minimum response cycle of a 7-day tool is a week. You cannot smooth out intra-day impulses using a 7-day tool. Therefore, starting in June, the CCP central bank narrowed the overnight corridor to 50 basis points first, and began doing overnight reverse repos frantically just to suppress that 10 basis point price hike. By late September this year, the daily ceiling of this quota was raised to 1 trillion yuan. What does this mean? It means they are setting a ceiling on financing costs for non-bank institutions on a daily basis. Pan Gongsheng's action on October 19 was merely an opportunistic switch, turning this intra-day firefighting facility from a temporary tool into a permanent one. Ah, right—shortening the maturity serves another function: while keeping the reverse repo rate unchanged, switching the interest rate anchor to overnight is equivalent to a cumulative rate cut of about 10 basis points. In other words, the CCP central bank doesn't need to announce a rate cut, yet the policy rate figure drops by over 10 basis points, and the banks' net interest margin doesn't take another hit from a formal rate cut. We must remember these three words: net interest margin. Net interest margin is the key to the entire story behind this.

Let's look at this non-bank redemption facility again. What did Pan Gongsheng say about it? He said this tool is normally not open. When is it opened? Only when wealth management products (WMPs) and mutual funds are redeemed together, and bonds drop more as they are sold, leading to more redemptions the more they are sold. In other words, it is a circuit breaker tool. Those who can come to borrow money are only wealth management subsidiaries, public funds, and their parent banks and parent securities firms behind them. Those who borrow money must also pledge high-grade bonds such as treasury bonds, precisely so that the market won't feel that the central bank is providing a bailout backstop. This list completely overlaps with the main net sellers of bonds from November to December 2022. The CCP's People's Bank of China (PBOC) essentially wrote the market entities that stepped into the trap last time into this rescue list, so this is actually a post-hoc patching of a hole, except now this hole is much bigger than in 2022. Let's look at the data: wealth management scale rose from 26.65 trillion yuan at the end of 2022 to 33.5 trillion yuan this year, and "Fixed Income Plus" products with stock positions have broken through 8 trillion yuan. Moreover, this liquidity fault line has already been rehearsed twice this year. For example, WMP redemptions in mid-June directly transmitted to credit bond ETFs, and then the stock market crash in mid-to-late July drove the rate of WMPs breaking below net asset value to above 2.5%. Although neither formed a spiral, they exposed the exact same structure. What structure? On your liability side, you have 150 million retail investors who can click redeem at any time; on your asset side, you have over 97% interest rates plus 8 trillion yuan in "Fixed Income Plus" products; sandwiched in the middle are 1.17 trillion yuan in customized bond funds that can be redeemed at any time by certain banks. Meanwhile, the CCP's central bank stipulates that high-grade collateral must be pledged and it only applies to wealth management parent companies. This means the rescue only reaches the parent company level, while the central bank doesn't care about the net losses of subsidiaries. This is the real meaning of not creating the illusion of a central bank backstop. To put it bluntly, what Pan Gongsheng is afraid of is not whether interest rates are high or low, but fucking afraid that their interest rates will spike, because 97% of the entire system's leverage is now built on the assumption that interest rates will not spike. So narrowing the corridor to 50 basis points overnight, and then opening a window that only accepts high-grade collateral—combining these three things, what is China doing? It is nationalizing the volatility of the bond market—hey, it should be called Party-owning it! Market prices whose volatility has been Party-owned are no longer price signals, but through-and-through policy signals. Having finished discussing bonds, let's move on to the stock market. Wu Qing said in the same afternoon that 18 active ETFs introduced incremental funds into the market, but the data tells me that the problem with mainland A-shares is precisely that the incremental funds are gone. Margin balance in the Shanghai and Shenzhen stock exchanges peaked on June 30 this year, reaching 2.99 trillion yuan at that time, but in July alone, 411.5 billion yuan flowed out, and by October 14, only 2.5 trillion yuan was left. The growth rate first slowed down, then dropped off a cliff, and then steadily declined; this is what high-level leverage clearing looks like.

Let's look at the new account opening data for A-shares. The number of new account openings was 4.916 million in January this year, and directly plummeted to 1.912 million in September, which was also the lowest of the year. Let me look at what these fucking idiots in the CCP's "Barking Brigade" (National Team) are doing. Looking at the shares of the four CSI 300 ETFs heavily held by the CCP's "Barking Brigade", in the first half of the year, their market value shrank from 200.6 billion to just 115.8 billion. In other words, during that previous rally, what role did the CCP play? They were net sellers! Let's also look at this September combination: trading turnover hit a 14-month low, margin financing had net outflows, and new account openings were the lowest of the year, yet net inflows into broad-based ETFs were positive at 45.2 billion yuan. There is only one explanation for this: these bottom-supporting funds were taking over the selling orders from retail investors and leveraged capital. Meanwhile, existing active equity funds had net redemptions of 248.1 billion yuan in the second quarter, marking 14 consecutive quarters of net redemptions. Now, the behavior of these fund investors is also very standard: once they break even, they redeem, and the more prices rise, the more they redeem.

Let us look at liquid funds now, where M1 year-on-year dropped from 5.5 percent in May to 3.2 percent in September. Non-bank deposits in brokerages and fund accounts dropped by 1.91 trillion in September alone, and the average daily trading volume plummeted from 3.13 trillion in June to 1.44 trillion on October 19. Trading volume was directly cut in half in three months. Introducing eighteen active ETFs at this point and calling them incremental capital is fucking laughable. Media estimates say the initial offering for a single fund is only 2 billion, making 360 billion for all eighteen—accounting for just 2.5 percent of the trading volume on October 19, and 8.7 percent of the leveraged funds outflowed in July. The word 'incremental' is fucking meaningless at this scale. The ruthless idiot is a financial illiterate himself. What problem are active ETFs actually solving? They are not solving where the money comes from; they are solving how the money should move when redeemed. To understand this, one needs to trace the redemption processes of off-exchange funds and on-exchange ETFs side by side. Let us look at off-exchange first: if an off-exchange active fund is redeemed, the fund company must transfer cash to the fund on the second trading day, so the money can only come from selling stocks. Therefore, existing active funds have seen net redemptions for fourteen consecutive quarters, and every single transaction is actual selling pressure in the secondary market.

But ETFs are different. What do holders exit with? They sell their shares on the exchange to another investor or market maker. This leads to a problem: the basket of stocks contained inside the ETF is never sold on the market from start to finish. These shares simply pass from one person's hands to another. Even if a large institution actually returns ETF shares to the fund company, the fund company pays out the stocks themselves, not cash, and the stocks still are not sold on the market. This is the core function of launching active ETFs at this moment. It changes an equation structure, turning 'redemption equals selling stocks' into 'redemption equals turnover.' In other words, the same exit demand that would smash the market off-exchange becomes trading volume on-exchange. Moreover, the trades of market makers and arbitrageurs are all counted in this turnover, which creates a false impression for people. What false impression? Oh, it looks as if liquidity has returned. The thing that must be guarded against most is these assholes doing wash trades and cross-trading on the exchange, you know? Deliberately pumping up this trading volume to trick retail investors into believing that trading volume has returned. I believe these fucking idiots in the CCP have zero psychological burden doing this. Then there is the fee tier: the management fee for active ETFs is 1 percent, while broad-based passive ETFs are only about 0.2 percent. This is equivalent to giving the continually redeemed actively managed industry a new rule with a 1 percent fee shell, locking fund managers into large-cap balanced and dividend styles. That is why not a single one of these eighteen is focused on tech growth.

In fact, the liquidity turning point for A-shares already happened in June, and the third-quarter decline is just the reckoning of this turning point. Moreover, active ETFs are merely a mechanism for turnover and inflating trading volume. With a paltry 360 billion, they still have the fucking nerve to call it an incremental tool. It is a fucking joke. Next, let us talk about the third overlooked deep-water bomb, which is the dual-track system of loan pricing. What did Pan Gongsheng say? He said that enterprises with strong financial capabilities can choose the overnight repo rate or LPR as the pricing benchmark for floating-rate loans, while the LPR continues to serve small businesses and personal loans. LPR is the loan prime rate, 3 percent for one year and 3.5 percent for five years and above. On the morning of October 20, he quoted it again; it has remained completely unchanged for seventeen months. Meanwhile, the overnight reverse repo rate on October 19 was 1.26 percent. Even if banks add 100 basis points of profit on top of this 1.26 percent overnight rate, the interest rate would still be only around 2.6 percent. But even so, it is still 70 to 80 basis points cheaper than the 3 percent LPR. A 100-million loan saves 700,000 to 800,000 in interest a year. So what is this structure? It means large state-owned enterprises with bargaining power can directly hook into the overnight wholesale price strongly controlled intraday by the CCP's central bank, equivalent to obtaining a disguised targeted interest rate cut, while small businesses and 150 million mortgage-paying households without bargaining power remain anchored to the LPR that has not moved for seventeen months, with the sole purpose of continuing to provide banks with this net interest margin.

Why must they do this? Because the net interest margin (NIM) of banks under the Chinese Communist Party (CCP) has hit rock bottom. In the second quarter of this year, the average NIM for commercial banks was only around 1.25% to 1.3%, while the non-performing loan (NPL) ratio reached 1.52%. And this 1.52% is, in all likelihood, fucking fake. Isn't it clear then? When the NPL ratio is higher than the NIM, banks are continuously losing money. Furthermore, an official interest rate cut will cause mortgage and small-business loans to be repriced across the board, and their interest rates will also fall, which will slash the banks' NIMs once again. Actually, what is the most sinister part of this move? The most sinister part is the direction of risk transfer. Look, loans pegged to the overnight rate are recalculated every day based on the overnight rate. What does this mean for banks? It means they are directly transferring the interest rate risk on the asset side and the maturity mismatch risk to the borrowing enterprises. For example, when using LPR for lending in the past, didn't banks like to borrow short and lend long? Suppose the interest rate given to an enterprise was 3%; if the overnight rate rose by 100 basis points, the bank would earn 100 basis points less in interest margin. Now, it's different: if the overnight rate rises by 100 basis points, I just add 100 basis points directly to the loan interest rate, and that's it. It's equivalent to the bank's mismatch risk disappearing immediately. In this situation, the bank's practice of borrowing short and lending long has become administrative arbitrage, but the interest rate risk has not disappeared; it has all been transferred to the enterprises, and real-economy enterprises have absolutely no tools to hedge against overnight interest rates. The CCP's central bank is, on one hand, suppressing the volatility of the overnight rate to around 44% in 2024, and on the other hand, stuffing this exposure into the balance sheets of enterprises. Therefore, once the volatility is released, enterprises will definitely be the first to take the hit.

Finally, regarding the statement about phasing out the benchmark interest rate for deposits and loans, Pan Gongsheng's words were narrower and more ruthless than the market understood. He said that the benchmark interest rate has not moved since its last adjustment on October 24, 2015. Then he said that this thing no longer plays a role in the pricing of deposits and loans, and currently only remains in a few judicial areas as a basis for calculating interest. As for the stock of contracts, the central bank converted 67.4 trillion yuan in 2020. The next step is to replace the interest calculation basis in these areas with market-based interest rates as well. The real hidden landmine is that he himself pointed out the judicial field. Look, the overdue interest on a large number of commercial contracts is calculated based on a multiple of the central bank's benchmark loan interest rate; I recall it being three or four times. In disputes where no interest rate is agreed upon, courts also refer to the benchmark interest rate to calculate interest. Since October 2015, the one-year benchmark loan interest rate has been 4.35%, so this is a figure frozen at a high level. Once the judicial interest calculation basis is changed to the LPR of 3% or the overnight rate of 1.26%, the legal cost of default will directly drop by 30% to 70%. So, who is the largest debtor in Chinese commercial litigation? By the end of August, the accounts receivable of industrial enterprises above the designated size had reached 29.48 trillion yuan, a year-on-year increase of 9%. Among the counterparties, government platforms and state-owned enterprises are the main culprits behind the arrears. In other words, phasing out the benchmark interest rate does not change the interest on any existing loan; what it changes is the cost of defaulting. The beneficiary is the party that owes money, and the one who suffers is naturally the party that is owed money.

The final bomb is high-grade collateral. To talk about this, we must first discuss credit spreads. What is a credit spread? A credit spread is the yield premium of corporate bonds and local government financing vehicle (LGFV) bonds over government bonds of the same maturity; it is the compensation the market demands for default risk. On June 30 of this year, the credit spread for three-year AAA-rated medium-term notes was only 16 basis points, and for AA-rated ones, it was around 30 basis points. By September, the overall trading spread had narrowed by another 3.58 basis points and is still being compressed. This is the result of the debt-resolution narrative and the asset shortage pushing spreads to historical lows. However, in September of this year, spreads in regions like Shanxi, Liaoning, and Yunnan began to widen. What does this mean? It means that provinces with fiscal garbage can no longer suppress these interest rates. So, how does this so-called high-grade collateral rule work? Let's look at the mechanism. From now on, every wealth management subsidiary and public fund knows one thing: when trouble strikes, the only assets that can be exchanged for life-saving cash from the central bank are government bonds and a few high-grade bonds. So, what will they do? They will hoard government bonds as this life-saving collateral. When a crisis actually hits, everyone will first sell what they have that cannot be pledged to the central bank—things like junk LGFV bonds rated AA+ or lower, bank Tier 2 capital bonds, and perpetual bonds. These assets will have no liquidity at that point because they can neither be pledged nor exchanged for cash, so their only fate is to be sold off.

During the period from November to December 2022, the yields on AA+ LGFV bonds and AA+ Tier 2 capital bonds rose by about 120 basis points, and the starting point for AA-rated spreads jumped directly to over 100 basis points. But today, the starting point for spreads on similar bonds has been compressed to 20 to 40 basis points. This means that a sell-off of the same magnitude will cause spreads to widen by four to seven times. Last time, the AA-rated spread rose from 100 basis points to 220 basis points, more than doubling. Today, the starting point for similar bonds is only 20 to 40 basis points; if you push it up by another 120 basis points, you get 140 to 160 basis points. The lower the starting point, the more severe the amplification of the same sell-off; this is the effect where the marginal impact of a sell-off becomes greater. Therefore, the collateral rule is equivalent to the CCP central bank announcing in advance a credit stratification table for a crisis: government bonds are first-class citizens, the Tier 2 and perpetual bonds of major banks are second-class, and LGFVs and those rated AA+ or lower are essentially outcasts. From now on, credit spreads are no longer a function of fundamentals, but a function of collateral eligibility. If we look at these three bombs together, what do they have in common? The commonality is that they strip risk away from the central bank and commercial banks and place it on the balance sheets of enterprises, creditors, and holders of low-rated bonds. However, the total amount of risk in the entire system has not decreased by a single bit; what has changed is the ownership of that risk.

So, who is the real gray rhino in the coming year? The most likely event to arrive first is a bond market stampede and a wave of redemptions in wealth management products. I estimate that the probability of an event on the scale of 2022 occurring within 12 months is between 45% and 55%. A 2022-level event means the 10-year yield rising by more than 20 basis points in a month, and wealth management products seeing outflows of over 10,000 billion in a single month. The reason this is at the top of the list is not because it is the most terrifying, but because it is the cheapest to trigger; it only requires a reduction of 1 trillion in lending from major banks and the 10-year yield rising by a dozen basis points—if these two things happen simultaneously, the condition is met. Both June and September of this year have already seen half of this happen. Why do I say half? This half refers to the liquidity side. You see, in June, lending from major banks dropped by 1 trillion, and in September, the overnight rate hit a yearly high of 1.47%. Both times, it was only missing the 10-year yield spike, so it didn't evolve into a stampede. Following that is the tail risk triggered by collateral stratification, where the probability of credit defaults among LGFVs, small and medium-sized banks, and non-bank financial institutions is estimated at 35% to 45%. Because this year is the final year of the 6 trillion debt swap quota and there are currently no quota arrangements for 2027, immunity is actually ranked last; it is estimated that there is a 25% to 35% chance of a disorderly collapse. This is not because immunity is safe, but because the collapse of immunity is already happening in the form of a slow decline.

Putting these three scenarios together gives you a single metric. What metric is that? Why is the central bank locking down the overnight interest rate? To protect bond prices. And why protect bond prices? To safeguard the 100 trillion yuan in bonds held by banks and the 34.5 trillion yuan net asset value of bank wealth management products. And why protect these two things? Because a banking system with a net interest margin of just 0.25% cannot endure a one-time bond mark-to-market shock. This is the bottom card of the CCP's finance right now. So this isn't any modernization of the monetary policy framework; it is a system relying on suppressing volatility to prop up asset prices. These assholes are now systematically offloading the costs onto businesses, creditors, and retail investors, and then announcing that they are ready to put out fires day by day. This is fucking pure self-deception. Because it's a very simple problem: in a system that requires firefighting day by day, the issue has never been the fire itself, but the structure of this garbage house. So everyone must pay attention: do not speculate on this shitty thing. Right now the CCP's financial system is already living day to day. If you rush into this garbage CCP capital market at a time like this, there are truly only three words for it: a dead end.