China’s sovereign bond prices fell, leading to higher yields, as investors reduced holdings in anticipation of increased fiscal spending to boost growth and delay interest rate cuts. Yields on 10-year government bonds rose over 10 basis points to 1.865%, hitting their highest levels this year, while 30-year bond yields surpassed 2% and one-year note yields reached 1.643%. This shift follows the Chinese government’s plans for fiscal easing, including a record-high fiscal budget deficit and a substantial increase in ultra-long-term bond issuance, signaling a more pro-growth stance.
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