Against the backdrop of China’s unexpected decision to reduce the key short-term interest rate, fund managers have once again turned their attention to government bonds. This decision has prompted investors to return to this instrument after a period of reduced investments this year.
Experts emphasize the attractiveness of China’s sovereign debt, particularly in light of indications that the country’s policymakers intend to take additional measures to support the economy. Further fiscal stimuli could lead to significant growth in national bonds.
The People’s Bank of China has lowered its seven-day reverse repo rate from 2% to 1.9%, marking the first reduction since August. This decision has fueled speculation about a possible cut in the key annual lending rate, which is expected in the near future. Government bonds have responded to this event, with the yield on 10-year bonds reaching the lowest level since September.
Chinese authorities are taking initial steps to ease policies in order to support the economy. China is already considering a comprehensive package of proposals to stimulate economic growth, particularly in the real estate sector and domestic demand.
