China’s government bonds gained after data showed gross domestic product increased by less than estimated in the first quarter, spurring speculation monetary policy will be loosened further to shore up growth.
The economy expanded 8.1 percent, the least since June 2009, compared with 8.9 percent in the fourth quarter, the statistics bureau said today. That was less than the 8.4 percent median estimate in a Bloomberg News survey. The central bank injected a net 112 billion yuan ($17.8 billion) of capital into the financial system this week, compared with 25 billion yuan last week, according to data compiled by Bloomberg.
“The GDP data is good news for the government bond market and yields will decline,” said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co, the nation’s sixth-biggest lender. “There is a high possibility that the central bank will cut the reserve ratio in April.”
The yield on the 3.94 percent government bond due January 2021 dropped four basis points to 3.51 percent as of 4:30 p.m. in Shanghai, the first decline this week, according to the Interbank Funding Center. The yield was unchanged this week.
China’s finance ministry sold 15 billion yuan of 273-day bills at an average yield of 2.87 percent, according to a trader at a finance company that participates in government debt auctions.
The seven-day repurchase rate, which measures interbank funding availability, climbed one basis point to 3.80 percent, according to a weighted average rate compiled by the National Interbank Funding Center. It fell 43 basis points this week.
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, dropped three basis points to 3.23 percent, according to data compiled by Bloomberg. The contract rose nine basis points this week.