Central Banks
China’s Battle Against Bond Bubble Escalates as Yields Sink More
- Market liquidity is ‘reasonable and abundant,’ PBOC says
- Government bonds were sold at record low yields Wednesday
The People's Bank of China (PBOC) building in Beijing.
Photographer: Andrea Verdelli/BloombergThis article is for subscribers only.
A battle between China’s central bank and government-bond buyers is intensifying, as traders keep snapping up the debt despite growing evidence of official displeasure.
On one side is the People’s Bank of China, which skipped offering lenders short-term cash for the first time since 2020 on Wednesday — a sign it was seeking to limit leveraged buying of government debt. The move was made right after one of its branches asked smaller lenders to be more mindful of their bond exposure and some state banks sold sovereign notes in large sizes, putting upward pressure on yields.