China’s bond market turned in the best performance in the last 21 months following a decision by the People’s Bank of China (PBOC) to inject US$25 billion into financial markets through open-market operations over the last three weeks, Bloomberg reported. The ChinaBond Treasure Bond Aggregate Total Return Index rose 0.7%, the largest increase since February 2009. Yields on the benchmark 3.29% government- issued notes declined 18 basis points from a two-year high of 4.07%. The benchmark 10-year yield closed at 3.89% on Friday and some analysts forecast it will continue to decline this month. Investors hope the central bank’s cash injection, alongside increased reserve requirements for Chinese banks, will ease inflationary pressure and, by extension, preserve the real return of bonds.
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