The Central Bank of the Republic of China published its June 2026 financial market operations update, showing weaker interbank funding activity alongside firmer money market rates, stronger bond cash trading and a sharp increase in derivatives turnover. Average daily interbank lending fell 21.9% year on year to CNY329.2 billion, while average daily bond repo turnover in the interbank market fell 21.0% to CNY6.2 trillion. At the same time, key repo rates moved higher on the month, with DR001 at 1.38%, DR007 at 1.45% and R001 at 1.42%. In the bond market, government bond net financing dropped to CNY768.3 billion, down CNY582.5 billion from a year earlier, while corporate bond net financing rose to CNY401.2 billion, up CNY159.0 billion. Total bonds under custody reached CNY205.0 trillion, spot bond turnover increased 19.9% year on year to CNY45.7 trillion, and the interbank cash bond turnover ratio rose to 22.0%. The 10-year government bond yield stood at 1.73% at month-end, the 10-year to 1-year spread widened to 61 basis points, and the spread between three-year AAA medium-term notes and three-year government bonds narrowed to 33 basis points. Over the first half of 2026, panda bond issuance totaled CNY160.0 billion and 21 new overseas institutions entered the interbank bond market. The update also showed broad gains in other market segments. Interbank RMB derivatives turnover rose 69.6% year on year to CNY7.8 trillion, treasury futures turnover rose 52.2% to CNY8.6 trillion, and commercial bill acceptance and discount balances increased 13.2% and 16.8% respectively. At month-end, the RMB weakened 0.25% against the USD in the interbank foreign exchange market, the CFETS RMB index rose 1.92%, the Shanghai Composite Index was up 0.6%, and the Shenzhen Component Index was up 4.0%. In the interbank bond market, holdings and trading in corporate credit bonds remained concentrated among the largest investors, with the top 50 investors accounting for 54.2% of holdings and 60.8% of trading.

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