Chinese Bonds Bounce Back on Bank Demand, Pullback in Equities

Chinese banks are deploying excess cash into the bond market, fueling a recovery just as a cooling stock rally draws investors back to government debt.

Long-tenor bonds are recovering, pulling the 30-year yield down for a second week after concerns over heavy debt issuance took it to the highest since 2024. Government auctions are also drawing strong interest, with total bids for seven-year notes hitting an all-time high relative to the debt sold.