Zhou's Leverage Warning Sends China Bond Yield to 2015 High
- PBOC boss says firms have too much debt, opening old wounds
- Run of stronger data stokes concerns over debt-fueled growth
Zhou Xiaochuan, governor of the People's Bank of China (PBOC), speaks during the Group of Thirty (G30) International Banking Seminar in Washington, D.C., on Oct. 15.
Photographer: Olivier Douliery/BloombergPeople’s Bank of China chief Zhou Xiaochuan has delivered a timely reminder that the country’s leverage issue hasn’t gone away -- and markets are paying attention.
Yields on China’s 10-year sovereign notes spiked to the highest level since April 2015 on a closing basis, while a stock gauge of smaller companies slumped the most in three months, after the PBOC governor voiced his concern at the weekend that Chinese firms have taken on too much debt. The comments come amid a run of strong data, with better-than-expected producer price growth Monday underscoring the image of an economy still riding the wave of unsustainable leverage to achieve its growth targets.