May 07, 2024

Fixed Income Insights (China) – May 2024

Monthly report

Lower Chinese yields, and higher G7 yields, push spreads to new lows

Chinese government bond yields fell overall in April, although yields reversed somewhat after the PBOC warning on duration risks in long bonds. Both Chinese sovereign spreads and the RMB are near cycle lows. Chinese $ HY property bonds gained traction from stimulus measures and improved performance of developers.

Key highlights:

  • Macroeconomic backdrop − China’s Q1 growth of 5.3% kept the PBoC on hold, as deflationary risk re-emerged 
  • Chinese bonds − Chinese bond yields fell further in April before reversing, after authorities warn of duration risk
  • Chinese and Asian bonds − Other Asian yields tracked Treasury yields higher; Chinese spreads versus G7 fell further
  • Performance − Indian and Chinese bonds outperformed YTD, as JGBs lost 12.6% due to a weaker yen

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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