**November Credit Slightly Boosted, Bill Rates Rose Then Adjusted**

### **1. November Bill Market Review** #### **1.1 Monthly Summary** In November 2025, bill rates exhibited a trend of "rising early before retreating, steadily climbing mid-to-late month, then falling and rebounding before declining again at month-end."

- **Early Month**: Following a sharp drop in bill rates at October’s close, buyers aggressively raised purchase guidance prices post-monthly transition, pulling market rates back to reasonable levels. However, bill supply rebounded from lows, with major banks entering early and small-to-medium banks frontloading demand. Institutions re-entered the market as rates hit expected levels, while some non-bank players also built positions. Buyer demand warmed, leading to a subsequent rate decline.

- **Mid-to-Late Month**: Funding costs rose intermittently, bill issuance surged beyond expectations, and major banks’ post-purchase resales fueled market sentiment. Credit smoothing shifted some demand to November, while discounted maturities fell sequentially, weakening buyer allocation needs. Active sell-side adjustments drove steady rate increases.

- **Month-End**: Major banks cut prices to re-enter, some small institutions adjusted positions temporarily, and rising rates stimulated demand from certain players. Non-bank participation further boosted buyer interest, causing a notable rate drop. However, as rates fell rapidly, buy-side demand waned, and ample supply led to oversupply-driven rebounds. On the final trading day, unmet quota demands prompted major and small banks to re-enter, pushing rates down across tenors.

#### **1.2 Market Data** **(1) Direct Discount Market** - **6M State Bank Bills**: 0.65%–0.87%, monthly volatility of 22 bps. - **3M State Bank Bills**: 0.55%–0.82%, monthly volatility of 27 bps. - **6M City Bank Bills**: 0.76%–0.98%, monthly volatility of 22 bps. - **3M City Bank Bills**: 0.66%–0.93%, monthly volatility of 27 bps.

**(2) Secondary Market** - **6M State Bank Bills (Ex-Agri)**: 0.57%–0.85%, monthly volatility of 28 bps. - **3M State Bank Bills (Ex-Agri)**: 0.33%–0.65%, monthly volatility of 32 bps. - **6M City Bank Bills (Ex-Agri)**: 0.68%–0.96%, monthly volatility of 28 bps. - **3M City Bank Bills (Ex-Agri)**: 0.44%–0.76%, monthly volatility of 32 bps.

**Macro Context**: - Improved U.S.-China trade talks and the completion of a ¥500B new policy financial tool in October supported manufacturing PMI (49.2%, +0.2 ppt MoM). - Real estate remained weak, while non-manufacturing PMI (49.5%) and composite PMI (49.7%) dipped.

**(3) Repo Market** - **Overnight (DR001)**: 1.30%–1.53%. - **7-Day (DR007)**: 1.41%–1.52%. - The PBOC net injected ¥1.238T via open market operations, including ¥1T MLF and ¥500B outright reverse repos. Liquidity tightened mid-month due to tax payments and bond settlements but stabilized later with central bank support.

#### **1.3 Policy Developments** - **Nov 3**: Ministry of Finance established a Debt Management Department to oversee government debt policies. - **Nov 4**: PBOC resumed treasury bond purchases (net ¥20B) and announced a ¥700B 3-month outright reverse repo. - **Nov 10**: State Council issued measures to boost private investment. - **Nov 11**: PBOC’s Q3 monetary policy report emphasized "moderately loose" policy and highlighted broader financial metrics like aggregate financing. - **Nov 26**: Six agencies unveiled a plan to enhance consumer goods supply-demand matching.

#### **1.4 Market Trends** - **Trade**: October exports fell 0.8% YoY, imports rose 1.4%. - **CPI/PPI**: CPI +0.2% YoY; PPI +0.1% MoM (first rise this year). - **Industrial Data**: October industrial output +4.9% YoY; Jan-Oct fixed-asset investment -1.7%. - **PMI**: Manufacturing PMI at 49.2% (+0.2 ppt), non-manufacturing at 49.5% (-0.6 ppt).

### **2. December Bill Market Outlook** Historically, December rates show a "fall-then-rise" pattern. Key projections: - **6M State Bank Bills**: 0.58%–1.59% (101 bps volatility). - **3M State Bank Bills**: 0.01%–1.67% (166 bps volatility). Factors include policy support, liquidity conditions, and seasonal demand shifts. For detailed analysis, refer to specialized reports.