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Bond Yields Holding Lower Post Inflation Data

CHINA RATES

China bond yields are tracking lower post the inflation misses, albeit with some carry over from weaker core yields in US trade. The chart below the generic 10yr bond yield (off a further 2bps to 2.69%), now back to mid Nov lows. As the chart highlights, yields bottomed out between 2.60/2.65% between Aug/Sep last year.

  • Market speculation of potential easier policy settings in the wake of the inflation figures may be more heightened, while recent deposit cuts at major banks is also a driver of lower yields.
  • 2 yr yields are sub 2.24% -1.5bps, while the 5yr is back to ~2.50%, -2.8bps so far.

Fig 1: China 10yr Bond Yield Back Close To 2022 Lows

Source: MNI - Market News/Bloomberg

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