China Goes to New Extreme in Crackdown on Bond-Market Frenzy
- Regulators told rural banks not to settle govt bond purchases
- Authorities cracking down on rally in China sovereign debt
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Chinese authorities are going to extraordinary lengths to tighten their grip on the world’s third-largest government bond market.
In a highly unusual move on Friday, regulators told rural banks in China’s Jiangxi province not to settle recent purchases of government bonds, an order to effectively renege on their market obligations. It was the latest in a string of interventions designed to cool a market rally that sent yields to record lows and stoked official concerns that banks have become too exposed to interest-rate risk.