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China Government Yields Sharply Higher, PBoC Warnings Continue

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China Government Bonds are experiencing significant declines across major benchmarks, with yields rising by 5-7bps.

  • The 10-year yield, currently around 2.34%, has risen by 4bps, returning to levels last observed in early March this year.
  • Reports over the weekend from local media indicated that the PBoC instructed rural banks to decrease leverage and shorten duration in bond investments in certain regions of the country, according to Bloomberg. This directive aligns with recent warnings issued by authorities regarding excessively low yields, which have diverged from economic fundamentals.
  • The recent scaling back of expectations for PBoC easing, combined with a risk-on sentiment in onshore and Hong Kong equities likely contributed to market pressures today.
  • Today's cheapening has halted the upward trend in 2- and 10-year US-CH yield differentials, both of which reached their highest levels in the current cycle last week.
  • Tomorrow, the local calendar will feature official PMI data, with expectations anticipating a decrease in both manufacturing and non-manufacturing PMIs compared to March levels.
  • South Korean Sovereign Bonds are also experiencing declines, albeit with yields rising by only around 2bps beyond the 2-year maturity.
  • Today's local data calendar revealed March Retail Sales growing by 10.9% y/y, down from 13.7% in the prior period. March Industrial Production and the Cyclical Leading Index are scheduled for release tomorrow, ahead of April Trade Balance figures on Wednesday.
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China Government Bonds are experiencing significant declines across major benchmarks, with yields rising by 5-7bps.

  • The 10-year yield, currently around 2.34%, has risen by 4bps, returning to levels last observed in early March this year.
  • Reports over the weekend from local media indicated that the PBoC instructed rural banks to decrease leverage and shorten duration in bond investments in certain regions of the country, according to Bloomberg. This directive aligns with recent warnings issued by authorities regarding excessively low yields, which have diverged from economic fundamentals.
  • The recent scaling back of expectations for PBoC easing, combined with a risk-on sentiment in onshore and Hong Kong equities likely contributed to market pressures today.
  • Today's cheapening has halted the upward trend in 2- and 10-year US-CH yield differentials, both of which reached their highest levels in the current cycle last week.
  • Tomorrow, the local calendar will feature official PMI data, with expectations anticipating a decrease in both manufacturing and non-manufacturing PMIs compared to March levels.
  • South Korean Sovereign Bonds are also experiencing declines, albeit with yields rising by only around 2bps beyond the 2-year maturity.
  • Today's local data calendar revealed March Retail Sales growing by 10.9% y/y, down from 13.7% in the prior period. March Industrial Production and the Cyclical Leading Index are scheduled for release tomorrow, ahead of April Trade Balance figures on Wednesday.