China’s bond yield

The prices of China’s sovereign bonds fell on Monday, which led to their highest levels this year, since investors cut the positions on bets that the additional fiscal expense will increase the growth and delay the cuts of interest rates.

The yields on the 10 -year government bonus of China, which move inversely to prices, won more than 10 basic points on Monday to reach 1,865%, its highest level this year, according to LSE data. Marks an increase of 25 basic points of the minimum record of January.

The yields of the 30 -year -old sovereign bonds rose above the key psychological level of 2% to reach 2,030% on Monday, while the yields in the one -year note also gained 10 basic points to reach 1,643%. At 1 in the afternoon in Beijing, the yields had reduced some profits.

“Growth optimism has returned in China,” Frederic Neumann, Asia chief economist at HSBC Bank, said to CNBC by email. “The National People Congress pointed out a stronger growth position by the Government, focused on tax flexibility.”

The yields of the Chinese government bonds have risen of historical minimums in January In the midst of optimism about the prospects of the economy after The officials established an ambitious growth goal of about 5% in a high -level government work report last week.

Beijing also announced A rare increase in its fiscal budget deficit at 4% of GDP -The highest from at least 2010-along with a plan to broad Additional bond issuance of 300 billion last year.

A greater supply of bonds generally causes existing bonds to be less attractive to investors, which drives prices and supports yields.

Government bond emissions could increase even more if commercial tensions with the United States intensify, said Ju Wang, head of the Chinese FX and BNP Paribas strategy.

“There is still room for long -range rates to correct themselves even more in a potentially faster emission rate of long -date bonds, the government’s goal to boost market and real estate consumption, and continuous capital concentration,” Wang said.

In a very monitored press conference last Thursday, the governor of the Central Bank Pan Gongsheng repeated his position that the Central Bank will do so reduce interest rates and inject liquidity In the financial system through cuts to the amount of cash that banks must have as reserves “at an appropriate time”.

The authorities have repeatedly hinted to reduce policy rates since the end of last year, but have not yet followed.

PAN reiterated on Thursday that the PBOC wanted to maintain the stability of the currency in “A reasonable and balanced level.” Preventing Yuan from weakening too fast could be seen as a sign of goodwill before any negotiation with the president of the United States, Donald Trump, in a commercial agreement, economists said.

He Yuan Chinese on the high seas Lost around 0.24% on Monday to operate at 7,2588 against the US dollar.

“The increase in bond yields in China provides a counterweight against depreciation pressure on Renminbi, especially in the context of the fall of yields of the United States,” said Neumann. He 10 -year Treasury performance. UU. He has lost more than 50 basic points since January and quoted around 4,2839% on Monday.

However, looking towards the future, Neumann said that the sale of Bondas could “run out of steam”, since the Central Bank prioritizes growth by the management of the exchange rate, with the “monetary policy position (remaining) inclined towards decrease.”

The Chinese MSCI index has increased almost 20% this year, while the Hong Kong list Hang Seng index surpassed the overall pairs overcome, with more than 18% of the date.