PBoC Publication Points To Move Higher In Long End CGB Yields

RTRS run headlines covering a PBoC publication which stresses that long-term CGB yields will operate within a reasonable range that matches the country’s long-term growth expectations.

• The publication also points to scope to alter CGB market liquidity via buying and selling CGBs, a matter that has been covered in recent weeks/months.
• Elsewhere, the headlines point to an expectation for a rebound in long end CGB yields given issuance dynamics (a reminder that a jump in ultra-long special bond issuance was flagged at the NPC back in March, so this doesn’t seem to be fresh news).
• The headlines come as most CGB yields print fresh cycle lows (10s and 30s are comfortably below their ’20 COVID-driven troughs) given the lacklustre rebound in the Chinese economy, widespread expectations for further policy easing and presence of well-documented economic risks.

Fig. 1: 10- & 30-Year CGB Yields (%)

Source: MNI - Market News/Bloomberg