China 10-Year Bonds Drop for Fifth Day as Yuan Damps Easing Bets
- Citic analyst says PBOC turning cautious on monetary easing
- Offshore yuan at five-year low as fixing cut for seventh day
This article is for subscribers only.
China’s 10-year sovereign bonds fell for a fifth day on speculation the yuan’s depreciation will prevent the central bank from easing monetary policy further.
The People’s Bank of China drained cash from the financial system in December via open-market operations and its Medium-term Lending Facility, even as demand for funds increased at the year-end. A central bank research bureau economist last week damped speculation lenders’ reserve requirements will be eased, saying that any adjustments should avoid causing too much volatility to short-term rates. The yuan in Hong Kong sank to a five-year low on Wednesday as the PBOC lowered its reference rate for a seventh day.