China’s benchmark sovereign bond yield jumped the most in a year, as quickening inflation sowed doubts whether the nation’s notes can maintain their world-beating advance, reported Bloomberg.
The 10-year government bond yield climbed as much as six basis points to 2.87% on Monday, its biggest rise since July 2020, after eight straight weeks of declines. That’s after China’s July factory-gate inflation unexpectedly returned to a 13-year high of 9% touched in May. A rise in short-term interbank rates also weighed on government debt.
The surge in inflation is fueling concern that price pressures in the world’s second-largest economy may not be transient. Rising inflation may also complicate potential easing measures from the People’s Bank of China and slow the rally in bonds that’s partly fueled by expectations of liquidity support from policymakers to boost the slowing economy.