The People’s Bank of China (PBoC) released the yield curves of Chinese Government Bonds (CGB) and other financial instruments on its official website from June 15, 2016.
All the yield curves are produced by China Central Depository and Clearing Ltd. (www.chinabond.cn), and the 3-month government debt yield is used by the International Monetary Fund (IMF) as the RMB–denominated interest rate for the purpose of calculating the interest rate of the Special Drawing Right (SDR).
It is an international practice to release government bond yield curve on central banks’ websites. This move will make it more convenient for the investors, both at home and abroad, to read and participate in China’s bond market.
Moreover, the Chinese sovereign bonds closed higher Wednesday as slowing M2 money supply pointed to further monetary easing from PBoC. The yield on the benchmark 10-year bonds which moves inversely to its price moved lower 1-1/2 basis points to 2.999 percent and the yield on the super-long 30-year bonds ticked down nearly 2 basis points to 3.516 percent.
The People’s Bank of China is expected to ease policy rates at its meeting scheduled this month, following a slow growth momentum and persistence of weak inflation. Also, China’s monetary data for the month of May remained weak as well, which will spur a further rate cut.
The PBoC is expected to either cut the reserve requirement ratio by 50 bps or ease policy rate by 25 bps at its policy meeting this month, Commerzbank said in a report.
China’s monetary data remained soft in May; while new loans rebounded to CNY985.5 billion from CNY555.6 billion in April, aggregate financing slowed down further to CNY659.9 billion compared with CNY751.0 billion in April and CNY2400 billion in March. In the meantime, M2 growth decelerated sharply to 11.8 percent y/y in May, from 12.8 percent in the prior month.
Meanwhile, Shanghai Composite (SSEC) closed higher 1.57 percent to 2,287.21. The USD/CNY fixed at 6.6001 against dollar on Wednesday by the PBoC, weaker by 0.32 percent, which was lowest since January 2011.
The material has been provided by InstaForex Company – www.instaforex.com