The credit default shock waves rippling through China are hurting demand for sovereign bonds. China’s 10-year government notes are set to drop for a seventh month in November, on track for the longest retreat since 2007. The central bank’s 200 billion yuan (US$30.5 billion) net cash injection on Monday failed to dispel concern over scarcer funding supply. That can prompt financial institutions to sell the most liquid government bonds for funding, as their clients step up redeeming investments in corporate bonds. In July, the yield tumbled about 20 basis points in the two weeks after the gauge breached this level.

Source: The Standard November 18, 2020 04:32 UTC