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Chinese government bonds are under pressure


Chinese bonds are under pressure with yields on benchmark 10-year government debt rising to 4%, the highest level in over three years.

The chart below tells the story.


In October last year, 10-year government bonds were yielding just 2.65%, so today’s increase is just a continuation of a broader move.

Analysts put the recent selloff in bonds down to a combination of weaker Chinese economic data, tighter liquidity levels and movements in government bond yields overses.

At this point opinions are mixed as to whether the rise in yields will continue, although the chart shows that 10-year yields have done plenty of work around this level in the past.

While bonds remain under pressure, that hasn’t stopped foreign investors from buying recently with data from ANZ revealing net inflows into Chinese debt increased by a further $US3.8 billion in October, continuing the pattern of the prior five months.

Chinese stocks are trading lower on the day with the Shanghai Composite currently down 0.33% at 3,436.4 points.

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