Chinese bonds plunge on firm economic data, awaits Q1 GDP figure

The Chinese government bonds plunged on Wednesday as investors cooled on safe-haven assets after reading strong Chinese economic data. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, moved higher 0.72 pct to 2.937 pct and the yield on the 3-year Treasury bond ticked up 0.96 pct to 2.413 pct by 0635 GMT.

China’s exports jumped the most in 18-months and declines in imports narrowed, adding to evidence of stabilization in the world’s second-biggest economy, stocks rallied thereafter. The Chinese exports denominated in US dollars rebounded 11.5 pct y/y in March, while imports shrank 7.6 pct on the same basis. Both readings were solid recoveries from February and surpassed economists’ consensus expectations, spurring hopes that China’s economy was turning a corner. Trade growth in renminbi terms also beat expectations.

“Chinese power consumption rose 5.6 pct y/y in March to 476.2 Kwh”, said Zhao Chenxin, spokesperson for the National Development and Reform Commission, at a press conference.

“Oil consumption also pointed to a stabilizing economy, with March consumption of refined oil rising 7.2 pct y/y, improving from January and February. Also, the diesel consumption, which reflects industrial and agricultural activity, went up 3 pct in March, compared with y/y drops in January and February”, Zhao added.

Boosted by the Chinese trade data, the Shanghai Composite Index leaped 2.08 pct at 3,086.51 and the Shenzhen Composite Index bounced 2.07 pct at 1,975.70.

Meanwhile, the investors will primarily focus on the upcoming Q1 GDP figure on Friday (0200 GMT), which is expected to decline to 6.7 pct y/y, as compared to 6.8 pct in the previous quarter.