{"id":1509086,"date":"2024-12-20T20:00:00","date_gmt":"2024-12-21T01:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1509086"},"modified":"2024-12-20T20:00:00","modified_gmt":"2024-12-21T01:00:00","slug":"trump-effect-chinas-1y-yield-crashes-below-1-for-first-time-since-gfc","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/trump-effect-chinas-1y-yield-crashes-below-1-for-first-time-since-gfc\/1509086\/","title":{"rendered":"Trump Effect? China’s 1Y Yield Crashes Below 1% For First Time Since GFC"},"content":{"rendered":"

Trump Effect? China’s 1Y Yield Crashes Below 1% For First Time Since GFC<\/span><\/p>\n

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For the first time since the Great Financial Crisis (2008\/9), short-dated Chinese bond yields have plunged back below 1%. In fact they are now at record lows…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

As we head into the end of the year, impatient investors are left waiting for a real plan to underwrite consumption (as yields melt inexorably lower), and capital flight accelerates (spurred by concerns about yuan weakness). China suffered a\u00a0record\u00a0fund exit last month under the category of securities investment<\/strong>, according to official data released this week.<\/p>\n

<\/a><\/p>\n

The drop in one-year yields reflects \u201cprevailing expectations for PBOC\u2019s strong easing next year amid the moderately loose policy and the shortage of high quality fixed-income assets,\u201d<\/strong> said\u00a0Ken Cheung, chief Asian foreign-exchange strategist at Mizuho Bank in Hong Kong.<\/p>\n

\u201cSuch developments could intensify concerns over US-China monetary policy divergence, and reinforce yuan depreciation pressure.\u201d<\/em><\/p>\n

Demand for shorter-maturity debt is also rising after the central bank\u00a0pushed back\u00a0against the bond-buying frenzy, prompting traders to shift away from longer-dated securities that are more exposed to the risk of intervention.<\/p>\n

Shorter-dated bonds may be benefiting from several factors, including ample liquidity and the central bank\u2019s operation of \u201cbuying short-term government bonds and selling some longer-dated notes,\u201d <\/strong>said\u00a0Zhaopeng Xing, a senior strategist at Australia & New Zealand Banking Group Ltd.<\/p>\n

While the PBOC\u2019s operations may have contributed to the front-end rally, the slide in yields \u201clooks quite extreme,\u201d <\/strong>said\u00a0Zhaopeng Xing, a senior strategist at Australia & New Zealand Banking Group Ltd.<\/p>\n

That\u2019s because yields have fallen below the level of about 1.1% paid by banks for deposits that are often used to buy bonds, he said.<\/p>\n

However, as Bloomberg reports, some analysts at least are warning the bond rally may be nearing its end.<\/p>\n

A pickup in economic growth, along with a shift in consumer savings behavior and a more cautious-than-expected PBOC policy, may turn the bond bull run into a rout next year, said\u00a0Adam Wolfe, an emerging markets economist at Absolute Strategy Research in London.<\/p>\n

\u201cChina\u2019s bond market likely overstates the easing that\u2019s expected.\u201d <\/strong><\/em><\/p>\n

The decline in yields is spurring debate about whether China\u2019s economy is heading toward a recession… especially if Trump’s tariff threats become real and not just a negotiating tactic.<\/strong><\/p>\n

There\u2019s some speculation interest rates may fall to\u00a0zero\u00a0if government efforts to bolster consumption and property demand continue to fall short.<\/p>\n

<\/a><\/p>\n

The nation\u2019s longer-maturity yields dropped below their Japanese counterparts last month in a sign investors are positioning for so-called\u00a0Japanification\u00a0of the world\u2019s second-biggest economy<\/strong>.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nFri, 12\/20\/2024 – 15:00<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/trump-effect-chinas-1y-yield-crashes-below-1-first-time-gfc<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Trump Effect? China’s 1Y Yield Crashes Below 1% For First Time Since GFC For the first time since the Great Financial Crisis (2008\/9), short-dated Chinese…<\/p>\n","protected":false},"author":0,"featured_media":1509087,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1509086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1509086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1509086"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1509086\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1509087"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1509086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1509086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1509086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}