PBoC Resumes Bond Purchases After 10-Month Pause

China’s 10-year government bond yield rose to 1.74% on Thursday, rebounding from an eight-month low reached in the previous session, as investors positioned ahead of a large ultra-long bond issuance. China’s Ministry of Finance is preparing to test demand at the long end of the curve with a CNY 85 billion 30-year bond sale on Friday, the largest single issuance of its kind since 2007. Moreover, issuance of 20-, 30-, and 50-year bonds is planned through October, easing earlier speculation that shorter-dated ultra-long instruments, such as 15-year bonds, might be introduced instead. The yield curve has been sensitive to supply expectations, with the spread between 30- and 10-year yields recently widening to a four-year high amid concerns over heavy long-dated issuance and inflation risks. Nevertheless, some analysts expect 10-year yields to drift toward 1.7% and 30-year yields toward 2.1%, assuming stable policy conditions.

China’s 10-year government bond yield dropped to 1.73% on Wednesday, hitting its lowest level since August 2025, as strong liquidity outweighed concerns about rising debt supply. The People’s Bank of China has kept conditions loose to support the economy, with overnight borrowing rate hovering near their lowest levels since 2023, even as Beijing prepares a record 30-year bond sale under its ultra-long sovereign program on Friday. Chinese government debt is increasingly seen as a safe-haven amid global uncertainty, particularly energy-market volatility tied to the Middle East conflict. Meanwhile, Indonesia will allow China to issue sovereign bonds in its domestic market on a reciprocal basis, advancing regional financial integration. The arrangement follows talks between Purbaya and Chinese Finance Minister Lan Fo'an at the IMF-World Bank Spring Meetings, where cross-border bond issuance was a key topic.

China’s 10-year government bond yield fell to around 1.75% on Tuesday, marking its third straight session of losses and hitting its lowest level in over a month, as markets continued to price in expectations of an accommodative policy stance from the central bank. The one-year Loan Prime Rate remained unchanged at 3%, while the five-year LPR held steady at 3.5%, marking the eleventh consecutive month of no adjustment and record lows. While deflationary pressures have shown tentative signs of easing and growth momentum is gradually stabilising, authorities remain alert to external risks, including the ongoing Middle East war. Recent developments include President Trump stating he’s unlikely to extend the two-week ceasefire, while Tehran is reportedly sending representatives despite earlier signals it wouldn’t join further talks. The central bank reiterated it will keep policy “supportive” and “moderately loose” to sustain growth while maintaining currency and financial stability.