China’s Short-End Bonds Rally Amid Debate on Likely PBOC Trading

China’s short-end sovereign bonds rallied as heavy purchases by state banks spurred a debate among traders on whether the central bank was behind the move.

Yields on China’s one- and three-year bonds fell last week, nearing a four-month low. The moves were spurred by hefty purchases of short-term debt by state banks, which some saw as a sign that the central bank is back in the market after a five-month hiatus to ensure loose funding conditions.