China Bond Traders Seek Refuge in One Sweet Spot Amid PBOC Fears
- Seven-year bond yield drops to below 2% for the first time
- Investors buying belly to avoid intervention risks: analysts
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China’s bond traders are seeking shelter in a little played corner of the market to take advantage of bets on further interest-rate cuts that come with a lower threat of official pushback at a record rally.
The yield on seven-year government bonds dipped below 2% for the first time in history this week, out-pacing drops in rates in any other major tenor. That’s a sign traders are flocking to the so-called “belly” of the curve — one of the least traded portions of the market — as authorities pledge to contain the rise in longer-dated debt.