MONEY MASTER

China's 10-year bond yield dropped below 2%   on Monday, reaching a historic low of   1.9750% , as investors flocked to the safety of bonds amid a weakening economy and expectations of further rate cuts. This marks the lowest level recorded since 2002. Key Drivers of the Bond Rally Economic Weakness : China's  struggling economy  and ongoing property sector challenges have pushed investors toward safer assets like bonds. Policy Measures : A recent  ban on preferential deposit rates  reinforces expectations of continued low interest rates. The  People’s Bank of China (PBOC)  is aligning deposit rates with the  seven-day reverse repo rate , currently at  1.5% . Rate Cut Expectations : Analysts at  Morgan Stanley  predict the PBOC will  cut policy rates by 40 bps by Q1 2025 , further supporting the bond market. Market Highlights 10-Year Treasury Futures : Jumped  0.4% , reaching a record high. 30-Year Treasury Yield : Fe...

Central Huijin Investment Ltd. , a key unit of China's sovereign wealth fund, has set a record for its debt issuances , selling 207 billion yuan ($29 billion) in bonds this year. This marks the largest onshore credit market issuance since the firm first tapped into it in 2010. The latest bond sales include 9 billion yuan in three-year debt securities and 15 billion yuan in five-year bonds , according to sources. Central Huijin has historically stepped in to buy equity during volatile periods to stabilize the stock market , and its holdings of trading assets surged by 388% in the first half of 2024. With China’s stock market rallying by 23% in recent months due to new stimulus measures , Huijin’s actions align with broader efforts to prop up the economy. The People’s Bank of China (PBOC) has also introduced liquidity tools, such as share buybacks and equity swaps , to assist market recovery. State-led buying, as suggested by DBS Bank strategist Wei Liang Chang , could further...

  China's bond rally has hit record highs, leading to speculation about the People's Bank of China's (PBOC) next move. Government debt yields have fallen to unprecedented lows, with the 10-year yield at 2.15%. This has been driven by investors seeking safety amidst declining stocks, property prices, and low deposit rates. The PBOC is caught between reducing borrowing costs to stimulate the economy and preventing market instability. Though it hinted at selling bonds to cool the market, it recently opted for interest-rate cuts. Investors remain divided. Some expect the PBOC to act if the rally goes too far, while others believe bond demand will continue due to strong fundamentals. Upcoming political meetings and manufacturing data may provide further guidance on Beijing’s policy direction. Key Takeaways: China’s bond rally pushes the 10-year yield to a historic low of 2.15%. Investors seek safe assets amidst market declines. PBOC balances economic stimulation with market stab...