China’s 30-Year Bonds Gain Amid Bets on Issuance Duration Cut

26s81hw1zx(0ua{]2nlb{nwh_media_dl_1.png BloombergArticle content(Bloomberg) — China’s super-long government bonds pushed higher on Monday after traders bet Beijing may scale back the maturity on its special-debt issuance to ease supply pressure.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentYields on 30-year government notes slid as much as 3 basis points to 2.28% on Monday, on track for the lowest close in over a month, following a three basis point drop on Friday. Futures on 30-year bonds advanced as much as 0.5%, the most in about three weeks.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle content“We think the odds are high for a reduction of duration in special bond issuances” given the high yield levels and the wide 10- and 30-year yield spreads, said Becky Liu, head of China macro strategy at Standard Chartered Bank.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentWith supply risks for ultra-long bonds likely fully — or even excessively — priced in as well as ample liquidity and weak equity sentiment, long-dated yields should grind lower, further flattening the yield curve, she added.Article contentThe repricing comes ahead of China’s special bonds issuance program, which the government made routine every year since 2024, that acts as an off-budget fiscal resource to support major strategic projects and consumer spending. While the finance ministry has to yet to release an auction schedule or confirm tenors for this year’s 1.3 trillion yuan ($190 billion) plan, traders expect issuance to begin as early as this month.Article contentA move to shorten issuance may ease investor concerns over crowded supply in long-dated bonds, fears which had earlier pushed 30-year yields to 17-month highs in March. Investors have worried the market may struggle to absorb supply as funds rotate toward equities and as China’s easing deflation dampens demand for bonds. Article contentArticle contentThe market is now turning attention to the introduction of a 15-year tenor, Sun Binbin, an analyst at Caitong Securities, wrote in a note. Over the past two years, special debt was only issued in 20-, 30- and 50-year tenors, according to data compiled by Bloomberg. Article contentThe gains in China’s 30-year debt also deepens the market’s divergence with global peers, which were mostly down on the day as inflation fears resurfaced following failed peace talks between the US and Iran. Chinese government bonds have generally outperformed since the outbreak of war in the Middle East, reflecting the economy’s relative insulation from energy shocks and oil-driven inflation pressures. Article content—With assistance from Shulun Huang.Article contentTrending Three Tankers Attempt Hormuz Transit After US Flags Blockade PMN Business GFL Said to Near Deal to Buy Secure Waste for Over $4.3 Billion PMN Business Posthaste: More Canadians desperate for tax refund to plug holes in their finances News Ships with Iran Oil Anchor off India as Trump Announces Blockade PMN Business Trump Blockade of Iran Ports Risks Widening War to High Seas PMN Business Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.

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