PBoC is reportedly to add new macro prudential assessment metrics for banks, tightening scrutiny on bond durations and fund investment ratio, sources suggest

Macroprudential tightening aimed at banks' bond duration and fund allocations is a familiar PBoC pattern: when policymakers grow uneasy about how much rate risk the banking system has accumulated during a bond rally, the response has tended to come through supervisory levers and assessment metrics rather than through the policy rate itself. Past episodes of this kind have followed long stretches of falling yields in which smaller banks and their fund vehicles crowded into duration, and the usual sequence has been guidance and window management first, formal metric changes later, with the long end of the CGB curve bearing the initial adjustment as banks trim duration to stay inside the framework. The actors matter here: the PBoC has repeatedly signalled discomfort with one-way bond positioning, and regional banks and mutual fund channels have been the recurring focus of that concern. The transmission channel is balance-sheet driven rather than liquidity driven, since the MPA framework feeds directly into banks' regulatory standing and lending capacity. What is worth watching next is confirmation of the metric details, any follow-through in verbal guidance to banks, and whether the move coincides with shifts in CGB supply or in the PBoC's own bond market operations, which in prior episodes have been used alongside supervision to lean against the rally.