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China’s Bond Traders Brace for More Pain as Slump Deepens

  • Yield on 10-year sovereign notes near highest since February
  • Investors are worried monetary easing isn’t coming after all
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Photographer: Wang Zhao/AFP via Getty Images

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A slump in China’s government bonds is set to deepen as traders’ hopes for aggressive monetary easing quickly evaporate.

The yield on sovereign notes due in a decade touched 2.85% on Wednesday, the highest level since February, before pulling back. The high extended the surge since the start of May to about 30 basis points, making the bonds the world’s second-worst performer after Bulgarian debt. The yield rose four basis points to 2.83% as of 4:03 p.m. Thursday in Shanghai.