China Bonds in Worst Week in Two Years as Fed Adds to Stresses
- Yuan drop, outflows cited as reasons for negative sentiment
- Reversal unlikely even in medium term, says CBA analyst
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China’s sovereign bonds posted the biggest weekly decline in two years, reeling from the fallout of hawkish Federal Reserve comments, yuan depreciation pressures and waning liquidity.
The 10-year sovereign yield surged 25 basis points this week, the most since December 2014, to 3.35 percent on Friday. The one-year yield jumped 50 basis points, while the five-year rose 27 basis points. The yuan, which fell to an eight-year low, is heading for the biggest weekly decline in a month.