Traders Ditch Yuan, Snap Up Bonds as Lockdown Adds to China Woes
- China’s 10-year yield posts biggest two-day drop since July
- The PBOC sets yuan fixing 150 pips weaker-than-forecast
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China’s slowing growth momentum is taking the wind out the yuan’s rally and lifting sovereign bonds as traders ramp up bets for the central bank to loosen policy further.
The onshore yuan fell to its weakest in a month on Monday while the 10-year government bond yield dropped as much as 10 basis points since Friday -- the largest two-day decline since July 2021. That was when the People’s Bank of China surprised markets by slashing the reserve requirement ratio by 0.5 percentage points for most banks.