May 4, 2023

Fixed Income Insights (China) - May 2023

Monthly report

Chinese yields fall further as lower inflation gives scope for more easing

Chinese spreads tightened versus the G7 in April, as yields fell more, helped by PBoC easing. A further fall in Chinese inflation, to below 1% y/y, gives policymakers more room to boost growth. Chinese $ IG credits matched US IG credit returns, but Chinese HY credits remain negative. Indonesian bonds led April gains.

Key highlights:

  • Macroeconomic backdrop − IMF retains 5.2% GDP growth forecast in 2023 for China, despite property challenges
  • Chinese bonds − onshore bond yields trended lower in April and YTD, stable yield curve
  • Chinese and Asian bonds − Asian governments spreads tightened in April as yields fell more than G7
  • Performance − Indonesian and Indian governments strongest performers in April, Korea underperformed

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.

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