China’s ‘Too Sudden’ Bond Selloff Is at Mercy of Stock Rally
- Chance of further PBOC easing dims as stock frenzy takes hold
- Debt to drop on better risk appetite, larger supply: analysts
Photographer: Qilai Shen/Bloomberg
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A brutal selloff that’s made China’s government bonds one of the world’s worst performers is showing no signs of ending any time soon.
That’s because the chances of significant monetary easing from the country’s central bank are becoming even more remote, as recent stock market gains raise government concerns over the risk of an equity bubble. Beijing will want to avoid the kind of debt-fueled stock binge that ended chaotically five years ago, which was partly encouraged by cheap and plentiful money in the financial system.