(Bloomberg) China’s 10-year sovereign bond fell by two basis points to 2.90% following a move by the central bank to inject 100 billion yuan or $16 billion into the market.
The move by PBOC happened after another 50 billion yuan earlier this week as the central bank joined other global monetary authorities stimulating growth amid an inflation spike.
Mizuho Bank Ltd analyst Ken Cheung says that PBOC opted for the flexible open-market operations rather than long-term liquidity injection. He says the liquidity still remains sufficient and does not see any structural gaps to fill.
Peiqian Liu, an economist at Natwest Markets Plc, says China’s local government bond issuance has missed targets for the first three quarters and expects an increase in supply to distort the seasonality of liquidity demand.
China’s turnover of its repo contracts reached over five trillion yuan on Thursday, the highest on record since May 2020, amid PBOC’s liquidity injections.
China’s 10-year government bond yield is currently 2.908%.
