China’s 10-year government bond yield rose to around 1.65% as the People's Bank of China (PBOC) announced plans to sell 60 billion yuan worth of six-month bills in Hong Kong on January 15.
China bond yields rise as trade surplus surges
This marks the most significant sale since 2018, aimed at absorbing excess liquidity and reducing speculative bets against the yuan. The liquidity tightening is expected to increase short-term interest rates, adding upward pressure on bond yields. The PBOC's actions reflect its ongoing efforts to stabilize the currency and manage market volatility. Last week, the PBOC unexpectedly paused bond purchases due to a supply shortage and economic concerns, with plans to resume based on market conditions.
China's trade surplus jumps as PBOC aims to narrow yield gap
This strategy could help slow the decline in yields and narrow the interest rate gap with the US. Meanwhile, the latest data revealed that China’s trade surplus surged to USD 104.84 billion in December, the largest since February 2024, as exports rose 10.7% year-on-year, surpassing forecasts.
