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PBOC cuts rate on 14-day repos

The People's Bank of China, the central bank, cut the interest rate it pays lenders for 14-day repurchase agreements for the second time in a month, spurring a bond rally on bets the move will lower borrowing costs and help the economy. The PBOC sold 20 billion yuan ($3.3 billion) of the contracts at 3.4 percent on Tuesday, according to a statement on its website. That compares with 3.5 percent in a similar auction on Oct 9. The monetary authority last cut the rate on Sept 18 from 3.7 percent. With the interbank 14-day repo rate around 3.3 percent, it's time for the PBOC to lower the yield again, Shenyin Wanguo analysts led by Shanghai-based Chen Kang wrote in a note.

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