October 5, 2023

Fixed Income Insights (China) – October 2023

Monthly report

Some signs of recovery after PBoC stimulus, but property risks remain

Chinese bond yields rose on higher growth and inflation expectations, but the PBoC retains easy policy settings, in contrast to G7 policies. Little evidence of improvement in the property sector and exports adds to growth downgrade risks. Chinese $ HY bond losses deepened in Q3, despite a weak September recovery.

Key highlights:

  • Macroeconomic backdrop − Early signs of liquidity and financial support boosting credit and monetary growth
  • Chinese bonds − Onshore bond yields rose a little in September, led by shorts, and 10s/2s continued to flatten
  • Chinese and Asian bonds − Asian sovereign spreads vs US fell further, as yields rose less than US Treasuries
  • Performance − Asian bond returns suffered from currency weaknesses in Q3. China and India bonds outperformed

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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