China Bonds Rally as Bank Deposit-Rate Cuts Fuel Easing Bets
- Big banks to cap some rates at 10 basis points above benchmark
- Move follows rounds of deposit rate cuts at smaller banks
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China’s government bonds extended a rally and bank shares advanced, after the nation asked commercial lenders to cap some deposit rates in a push to support a bumpy economic recovery.
The yield on 10-year notes dipped two basis points on Thursday to its lowest since November and a gauge of Chinese financial stocks jumped as much as 1.5%. The country’s biggest state-owned banks were permitted to lower the rates on so-called agreement and call deposits, according to a notice seen by Bloomberg News. The move will help drive down their costs, giving them scope to lower loan rates and helping to fuel lending in the economy.