SHANGHAI: Despite the country’s struggling economy, the world’s second-largest bond market, in China, is tense after a wild week during which the central bank began to intervene to stop a decline in yields heavily.
However, ardent investors argue that the government bond bull market still has legs, pointing to the shaky Chinese economy, deflationary pressures, and a lack of appetite for riskier assets among investors.
“We are still very optimistic,” stated a bond fund manager, despite the government’s unprecedented attempts to calm the volatile treasury market and stop the yields’ downward trend.
We don’t see a bright economic future… and we have peer pressure to produce returns,” the manager in Beijing stated, requesting anonymity because the subject matter is delicate.
Even those who have become pessimistic seem hesitant. Investor Wang Hongfei in Treasury futures said that as the market battles with regulators gets more intense, he decided to be “opportunistic” in the short term by trading quickly in skirmishes.
However, the authorities have opened a new front in the war of attrition against speculators and unwanted price movements in the nation’s stock and currency markets, with the PBOC now putting threats into action to calm bond bulls.
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