PBOC Takes Next Step To Selling Govt. Bonds

China government bonds are dealing 1-3bps cheaper, with a steepening bias, after Bloomberg reported that “China’s central bank took the next step toward selling government bonds to cool a record-breaking rally, saying it now has “hundreds of billions” of yuan of the securities at its disposal through agreements with lenders.”

• This followed a statement to the same effect on the PBOC website on Monday. In that statement the PBOC stated that it “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”, noting the decision was made “based on a prudent observation and assessment of the current market situation”. (See MNI link)