March 2, 2023

Fixed Income Insights (China) - March 2023

Monthly report

PBoC liquidity stabilises Chinese yields, as post-Covid recovery signs emerge

Chinese sovereign spreads fell back, as G7 yields surged. The PBC used open market operations to meet increased cash demands, as activity recovered, avoiding more rate cuts. Corporates outperformed govts and agencies. China HY credit retreated in February, as concern about the real estate sector re-surfaced.

Key highlights:

  • Macroeconomic backdrop − Is a post-Covid recovery underway in China?
  • Chinese bonds − PBOC liquidity injection helped stabilise Chinese yields, as Green spreads tightened
  • Chinese and Asian bonds − Chinese and Indian yield curves retain low correlation with G7 curves
  • Performance − Global governments retreated in February as inflation fears re-surfaced, including APAC bonds

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 performancemand multi-asset analysis, viewed through our indices and data, explore our Global Investment Research hub.

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