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Shuli Ren

A Watershed’s Coming for China’s $11 Trillion Bond Market

Beijing has an incentive to push yields below 3 percent. With deflation threatening, it may not be too late to join the rally.

A dip below 3 percent could open the debt floodgates. — A dip below 3 percent could open the debt floodgates.
Photographer: Goh Chai Hin/AFP/Getty Images

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January 29, 2019, 10:00 PM UTC

A watershed moment is approaching for China’s $11 trillion bond market: The 10-year sovereign bond yield looks poised to tumble below 3 percent.

The yield slumped to as low as 3.08 percent this month from 3.7 percent in September as the government fixed-income market rallied. The last time it fell below 3 percent for a sustained period was in 2016, when China was battling deflation.