China’s central bank purchased Rmb400bn ($56bn) of long-dated sovereign bonds on Thursday, a move that traders interpreted as preparation to directly shore up bond yields in its booming debt markets.
The People’s Bank of China said it bought Rmb300bn worth of 10-year notes and Rmb100bn of 15-year notes from primary dealers. The notes had been sold by the Ministry of Finance just earlier in the day to roll over maturing bonds.
Analysts said the move, which stops the bonds from being traded in the market, further fuelled speculation that China’s central bank would soon intervene in the bond market to prevent an eventual snapback that could trigger Silicon Valley Bank-style losses in the financial system.
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