February 06, 2024

Fixed Income Insights (China) – February 2024

Monthly report overview

More reflation from the PBoC, as it reduces bank cash reserves

China’s central bank continues its independent policy easing, as G7 central banks remain on hold. Chinese government bonds attracted safe haven buying, as the renminbi showed resilience to the US dollar recovery. Evergrande’s liquidation could have wider impact on property, since it underscores the risks of distressed asset sales.

Key highlights:

  • Macroeconomic backdrop − Liquidity takes priority as spring festival approaches
  • Chinese bonds − Longer Chinese bond yields fell to four-year lows, driving yield curves bull flattening
  • Chinese and Asian bonds − Asian yields rose in January, tracking Treasury yields, except in China and India
  • Performance − Emerging Asian bonds outperformed in January, but weaker currencies reduced returns in USD

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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