Investors have become net sellers of Chinese government bonds (CGBs) in recent weeks, a BNY Mellon indicator showed, as rising US yields and an aggressive American vaccination drive eat into the appeal of Chinese bonds, reported Reuters.
BNY Mellon’s iFlow indicator has shown “significant outflow” from Chinese government bonds this month, bank strategists said in a note, the first sustained net selling since global pandemic lockdowns began last year. The indicator presents flows as a weekly average, not by the value of net buying or selling.
Wee Khoon Chong, senior Asia Pacific market strategist at BNY Mellon Markets, told Reuters that narrowing spreads between Chinese and US bonds and a flat Chinese yield curve weighed on demand. The relatively rapid rollout of vaccines in the United States has also dimmed the appeal of Chinese bonds relative to US assets as expectations rise for a strong US recovery.
The iFlow indicator tracks $41.1 trillion in assets under management under BNY Mellon’s custody and administration. The majority of CGB flows captured by the indicator are cross-border, Chong said.