September 6, 2023

Fixed Income Insights (China) - September 2023

Monthly report

Chinese bond yields fall, and curve flattens, on growth challenges

Chinese bond yields fell on lower policy rates and weaker growth expectations. More home-buyers are made eligible for favourable mortgage rates, as real estate sales and investments continue to fall. Chinese dollar HY bond losses deepened as default concerns remain. Chinese yuan weakened, alongside global peers.

Key highlights:

  • Macroeconomic backdrop − PBoC cuts rates again as net exports slow, inflation falls and loan growth falters
  • Chinese bonds − Onshore bond yields fell further in August with lower rates, and 10s/2s yield curve flattened
  • Chinese and Asian bonds − Asian curves flattest in four years, sovereign spreads vs US mainly negative
  • Performance − A stronger US dollar drove losses in APAC bonds in US dollar terms, particularly in Australasia

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


Global & Regional Fixed Income Insights: quarterly deep dive 

Thursday September 21, 2023

Robin Marshall

Director, Fixed Income ad Multi-Asset Research

Sandrine Soubeyran

Director, Global Investment Research

Join the authors of this report on their webinar to hear the answers to key questions facing investors in fixed income markets:

  • Does the recent inflation shock mean the era of zero interest rates is over?
  • Have markets re-entered a world of higher policy rates in which investor focus will shift away from duration, and back to maximising carry, yield and re-investment income?
  • How would a deep debt deflation in China impact the global fixed income outlook?
  • Do labour shortages and steeper Phillips curves mean central banks will be forced to raise inflation targets, to prevent deep recessions?
Webinar at 2pm HK (for investors in the APAC region)

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