The Chinese sovereign bonds continued to recover Tuesday after falling to a decade low last week as investors maintained optimism over stabilising economic growth.
The yield on the benchmark 10-year bonds, which moves inversely to its price, rose nearly 1 basis point to 2.711 percent, the long-term 30-year bond yield jumped 1-1/2 basis points to 3.134 percent and the yield on the short-term 3-year bonds also climbed 1-1/2 basis points to 2.340 percent.
China’s bonds strengthened last week as investors poured into safe-haven assets on worries over the country’s property market restrictions and reduced leverage in the financial system, which is poised to weigh on its economic growth.
PBOC's chief economist said that China will grow around 6.7 percent in 2016 and monetary policy is now appropriate. Said will look at changes in the macro-economy and financial sector in the future and Yuan remains stable vs currency basket on Oct, despite falling against the dollar, this underlines commitment to new currency regime. Said impact on yuan to be limited if Fed raises rates in December and monetary policy will consider the possible impact on the property market.
On last Wednesday, China’s Q3 GDP growth stayed at 6.7 percent y/y, trended in line with the consensus, but in q/q terms, GDP growth nudged down to 1.8 percent q/q seasonal adjusted in the third quarter of 2016, from 1.9 percent q/q in previous quarter with growth in the secondary sector stayed at 6.1 percent y/y, while growth in the tertiary sector edged up to 7.6 percent y/y, from 7.5 percent y/y in the second quarter of 2016.
Meanwhile, People's Bank of China sets the USD/CNY reference rate at 6.7744, 0.08 percent weaker than 6.7690 yesterday and injects 235 billion yuan liquidity in reverse repos, including 85 billion yuan in 14-day repos and 35 billion yuan in 28-day repos.
The China's blue-chip CSI300 index fell 0.13 percent to 3,362.48 points at the end of the morning session, while the Shanghai Composite Index gained 0.03 percent to 3,129.26 points.
