SHANGHAI - In a move to cool down a powerful bond rally, China's central bank announced that it has hundreds of billions of yuan worth of bonds available for borrowing and selling based on market conditions. This strategy comes at a time when China's sovereign bonds have been performing strongly, with record low yields attracting savers seeking safe haven investments.
The People's Bank of China (PBOC) plans to borrow medium- and long-term bonds on an open-ended unsecured basis and sell them as needed, as part of agreements with major financial institutions. The recent comments from the central bank clarified its intentions to manage the flow of credit and market yields.
Market experts like Ming Ming, chief economist at CITIC Securities, have noted that the central bank's significant bond holdings could have a major impact on the market if sold off in a single day. Analysts believe that this move is aimed at stabilizing domestic interest rates and pausing the bond rally in the short term.
PBOC Governor Pan Gongsheng hinted at the possibility of trading in the secondary bond market, further indicating the central bank's proactive approach to managing market risks. The central bank also stated its intention to sell low-risk debt, including government bonds, when necessary while monitoring market changes closely.
Overall, investors should pay attention to the central bank's bond borrowing and selling activities, as they could influence market yields and credit flow. By understanding these developments, investors can make more informed decisions about their bond investments and overall financial strategies.