CHENGDU, Nov. 30 (NBD) -- Stock traders clearly sense every change of market liquidity and they adjust their operations accordingly, no matter whether the “market liquidity turning point” is coming. 

However, Ma Guangyuan, a renowned Chinese economist, said people have different definition of “market liquidity turning point”, therefore, when will this point starts to show is uncertain.

China's Market liquidity started to shrink when People’s Bank of China introduced the 14-day reverse repos in August this year. However, the market didn’t sense it. Bond yields fell sharply after a short-term rise. Until in late October, market liquidity tightens again when bond yields rise. 

A bond trader of a financial institution told NBD reporter that bull bond market has last three years. However, how far will bond yields fall remains unclear.

He added that people are worried about the future bond trends. Conversely, this atmosphere may help offset the downward pressure to some extent.  If the market liquidity tightens further, people may magnify their negative outlooks on the market.

In late August 2016, the People’s Bank of China introduced a 14-day reverse repos. Trading strategies and bond ratios show changes accordingly. However, the trader said he does not follow the reverse repos all the time. He only consider it as a normal phenomenon. We should not only see the rise of reverse repos, but also see when they will mature. They should keep a balance.

People are debating on how far will bond yields fall since the start of the third quarter. Traders also adjusted their strategies based on their own judgements.

Currently, leverage amplification is not a wise solution and people has less to do now, which in turn forces the market to lower leverage. In fact, bond dealers have already sense the market changes more clearly.