China's bond market is on the edge following disruptions as the central bank started intervening heavily to stem a plunge in yields despite a struggling economy.
A "Buy Treasury bonds" poster is seen at a bank in Haian, East China 's Jiangsu province, Aug 1, 2024. China 's bond market, the world's second largest, is on edge following a turbulent week in which the central bank started intervening heavily to stem a plunge in yields even as the economy is struggling."We don't see a rosy economic picture ...
But with the PBOC now turning threats into action to tame bond bulls, authorities have opened a new battle front - following wars of attrition long fought against speculators and unwelcome price moves in the country's stock and currency markets. The first shot was fired last Monday, when China's long-dated yields hit record lows amid a global rout that drove money into safe havens such as treasuries.
In another warning shot to bond buyers, the PBOC ceased providing cash through open market operations on Wednesday for the first time since 2020, contributing to the biggest weekly cash withdrawal in four months in support of yields.four rural commercial banks for suspected bond market manipulation, and would report several misbehaving financial institutions to the PBOC for penalty.To be sure, the flurry of measures have made some investors cautious.
The Shanghai-based fund manager said there's no reason to throw in the towel without seeing clear signs of economic improvement, and his strategy is to "buy on the dip."
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