China’s 10-Year Sovereign Bond Yields Fall to Lowest Since June 2020

Source: Bloomberg

China’s 10-year sovereign bond yields fell to an 18-month low, as the boost in short-term liquidity drove down interbank borrowing costs. MCHI is down 0.40% premarket.

• The 10-year government bond yields declined by two basis points to 2.795% as of 4:40 p.m. in Shanghai. This is the lowest level since June 2020.
• Government yields have been declining since mid-December, following the decision of the central bank decision to cut the reserve requirement ratio.
• Analysts expect further easing measures to be rolled out, with the economy showing an impact from a property decline, weak private consumption, and virus outbreaks.
• The People’s Bank of China boosted its 190-billion yuan liquidity injection on Tuesday morning, marking the highest in two months.
• Strategists believe there is no more room for a decline in the coming weeks, and markets are expecting more liquidity provisions in 2022.