February 10, 2023

Fixed Income Insights (China) - February 2023

Monthly report

PBoC awaits post-lockdown evidence, as China government bonds decouple further

Chinese government bond yields edged higher in January, after Covid restrictions were lifted in Q4 and a much wider fiscal deficit was announced. The PBoC is in no hurry to ease further, awaiting post-lockdown evidence first. China HY credits continued to rally in January, though 12-month returns are down 14%.

Key highlights:

  • Macroeconomic backdrop − China’s lifting of Covid and housing curbs boosts 2023 outlook
  • Chinese bonds − Government curve bear flattened further in January as disconnect with G7 markets deepened
  • Chinese and Asian bonds − Chinese and Indian government bonds have resisted a full inversion of 10/2s
  • Performance − Australasian and Korean government bonds led APAC bonds rally in January

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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