China’s Bonds in Biggest Two-Day Drop in a Month on Weaker Yuan

China’s one-year sovereign bonds had the biggest two-day decline in a month on concern a weaker yuan will spur outflows as local assets become less attractive.

The currency fell as much as 2 percent to a four-year low before paring the loss to close 1 percent lower at 6.3870 per dollar. That followed a 1.8 percent drop on Tuesday, when the People’s Bank of China ended a de facto peg that had been in place for more than four months and weakened the yuan by the most in two decades. It said in a statement Wednesday that the fixing’s volatility will rise temporarily.