MNI BRIEF: PBOC To Borrow CGBs In Response To Market Situation
(Corrects day in lead)
The People’s Bank of China will borrow treasury bonds in the secondary market, according to a statement on the PBOC’s website on Monday.
The PBOC “has decided to conduct treasury bond borrowing operations with selected primary dealers of open market operations in the near future” in a bid to “maintain the stable operation of the bond market” the statement said, noting the decision was made “based on a prudent observation and assessment of the current market situation”.
MNI reported last month that the central bank was likely to sell some treasury holdings to defuse a debt rally it sees as fuelling financial risk and to prompt more lending to the real economy. (See:MNI: PBOC Eyes CGB Selling To Curb Bull Bond Market)
Yields on treasury bond rose in the interbank market following the news. The yield on the actively traded 10-year CGB increased by 0.2bp to 2.24%, while that on 30-year CGB rose by 0.65 bps to 2.43%.