UNITED STATES, WASHINGTON (VOP TODAY NEWS) — The yield on ten-year government bonds in China fell to 3% for the first time since 2016 amid a general increase in interest in the most reliable assets amid a weakening global economic recovery.
The yield on these securities fell on August 13 by 1 basis point (bp) to 3%, its decline since the April peak was about 40 bp. n.
“The decline in the yield of Chinese government securities is probably the result of a rally in the US Treasuries market, as well as disappointing data on the volume of bank lending,” said a trader at China Merchants Bank Co. At Sytse.
“The potential for lowering returns, however, is limited unless China, of course, cuts rates on medium-term lending operations,” Bloomberg quoted the expert as saying.
Yields on 10-year US government bonds on Monday fell 9.1 bp. n. to the lowest since October 2016 1.64%.
The volume of new bank lending in national currency in China in July fell one and a half times compared with the previous month and amounted to 1.06 trillion yuan ($ 150 billion), the People’s Bank of China said on Monday.
Total financing (including bank loans, off-balance loans, as well as the placement of shares and bonds) last month more than doubled, amounting to 1.01 trillion yuan against 2.26 trillion yuan a month earlier.
Analysts believe that the yield on Chinese government securities will continue to decline. Thus, according to the forecast of Pengyang Asset Management, the yield on ten-year bonds may drop to 2.65%. The Hexa AMC forecast provides for a decrease in the yield of these securities to 2.75-2.85% per annum by the end of this year.
HFT Investment Management experts note that the current rate of return on ten-year government bonds of the PRC is still too high, given the economic situation in the country.
“We expect the yield to decline, because before that its decline was tiny compared to government securities in the United States and other countries,” said HFT analyst Yiping Chen
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