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10-Year CGB Yield Hits Fresh Low On Easing & Liquidity Expectations

CHINA RATES

MNI (London) - 10-Year Chinese government bond yields have moved through their COVID low, showing as low as 2.463% in recent trade, shedding ~3bp on the day. The benchmark has registered the lowest level on BBG records, which date back to 2005.

  • The broader CGB curve has bull steepened, with desks flagging sizeable demand for front end and belly CGBs on the part of large onshore banks.
  • When it comes to the drivers of the latest move lower in Chinese yields, heightened worry re: the property sector in the wake of the liquidation order for China Evergrande has been earmarked as a major factor, with expectations surrounding LNY liquidity provisions, the well-documented economic worry re: China and expectations for deeper policy easing in the wake of the latest RRR cut from the PBoC all factoring in.
  • Monday’s move lower in core global FI yields would have helped as well.
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MNI (London) - 10-Year Chinese government bond yields have moved through their COVID low, showing as low as 2.463% in recent trade, shedding ~3bp on the day. The benchmark has registered the lowest level on BBG records, which date back to 2005.

  • The broader CGB curve has bull steepened, with desks flagging sizeable demand for front end and belly CGBs on the part of large onshore banks.
  • When it comes to the drivers of the latest move lower in Chinese yields, heightened worry re: the property sector in the wake of the liquidation order for China Evergrande has been earmarked as a major factor, with expectations surrounding LNY liquidity provisions, the well-documented economic worry re: China and expectations for deeper policy easing in the wake of the latest RRR cut from the PBoC all factoring in.
  • Monday’s move lower in core global FI yields would have helped as well.