Pboc Temporarily Halts Bond Purchases
The People’s Bank of China (PBOC) said on Friday (10/1) that it would suspend purchases of government bonds in the open market due to a supply shortage, effective immediately. The central bank said it would resume purchases at an appropriate time based on market conditions.
The decision comes amid repeated warnings from the PBoC about the risk of a bubble in China’s overheated bond market, where long-term yields have plunged to record lows. Over the past year, yields on major bonds, including the benchmark 10-year government bond, have hit unprecedented lows as investors flocked to safe-haven assets.
The shift has been driven largely by ongoing economic uncertainty related to a prolonged property market slump. In December, Chinese leaders signaled further interest rate cuts, triggering another surge in bond market activity. That pushed the 10-year government bond yield to an all-time low of 1.6% earlier this month, exacerbating concerns over market exuberance. (AL)
Source: Trading Economics
