December 07, 2023

Fixed Income Insights (China) – December 2023

Monthly report overview

PBoC quickly eases liquidity after strains from government bond issuance

The PBoC increased loans to the banking system to ease liquidity, after bond issuance to finance the Q4 fiscal stimulus had strained liquidity. Chinese 7-10-year government spreads backed up, as G7 yields fell sharply. Chinese $ HY credit rebounded on policy support measures. Renminbi joined the currency rally versus USD.

Key highlights:

  • Macroeconomic backdrop − China may be a key global locomotive in 2024
  • Chinese bonds − Chinese curve flattened, as yields increased in shorts but edged lower in longs
  • Chinese and Asian bonds − Asian yields tracked US Treasuries lower
  • Performance − Developed Asian bonds led gains in November, helped by currency gains versus US dollar

This report provides actionable insights on currency-adjusted performance, macro drivers, shifts in yields, spreads and curves across conventional government and corporate bonds, for both renminbi and dollar-denominated issues.

For specialist content on a range of investment topics, including macroeconomic analysis and how it affects market performance, and multi-asset analysis, viewed through our indices and data, explore our Global Investment Research hub.


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