MNI BRIEF: PBOC Warns Market On Bond Rally - Press
MNI (BEIJING ) - The People’s Bank of China summoned financial institutions on Wednesday to warn of investment risks as China’s long-term treasury yields slumped to a record low this month.
According to the central bank run Financial News, the Bank asked institutions that had traded aggressively in the bond market rally this month to monitor their interest-rate risks and strengthen “the prudence of bond investments". The PBOC has recently taken severe action against a number of institutions suspected of engaging in unwelcome activities such as disrupting market prices, interest transfer, and lacking internal controls, the newspaper reported citing industrial sources.
The central bank said it would maintain law enforcement inspections with “zero tolerance for illegal and non-compliant behaviour in the bond market.” (See MNI Policy: PBOC Watching Bond Rally, Starts Stress Tests)
China's bond market decllined sharply after the news broke, with 10-year treasury yields up 5bp to 1.77% and 30-year treasuries up 5bp to 2.01%.