People's Bank of China

What a difference three weeks makes. On January 18, heading into the Lunar New Year holidays, we reported that the PBOC had injected a record 1.04 trillion yuan into the liquidity-starved banking system in an attempt to avoid a liquidity crunch as telegraphed just days prior by dramatic surge in short-term repo rates.

Since then, however, between the end of the holidays, and the stated Chinese intention to tighten the monetary system, things have changed drastically.

One year ago, S&P futures would tumble the second a flashing red headline noted that things involving China, the Yuan, or the PBOC were not playing out as expected. One year later, the market has forgotten it ever cared about the world's biggest debt bubble.

However, the time may have come to once again start worrying about China.

Overnight the PBOC injected another CNY95 billion into its banking system bringing the total weekly injection to a record CNY1.13 trillion.

Heading into the Chinese Lunar New Year, local banks are suddenly starved for liquidity like never before. On Tuesday China’s benchmark money-market rate jumped the most in two years, with unprecedented cash injections by the central bank being overwhelmed by demand before the Lunar New Year holidays.