The bond returns in China are increasing, but the shrinkage is expected to decrease

Economists say the recent bounce in the revenue of government bonds in China is not a sign of contraction, as it is expected that the continuous contraction pressure will remain low for borrowing.

Intensive sale was sent in Chinese government bonds Revenues rise in recent weeksThe Popular Bank of China drained liquidity from the money market to stabilize its currency and push the sudden height of Deepseek money to rotate to stocks.

The return on the return of 10 years has gained more than 30 basis points One of its lowest historical levels in January To strike the psychological level of 2 % this week, it has not been seen since December.

“There is no clear indication that the economy is outside the forest yet,” said Edmund Joh

Consumer feelings near the lowest levels and credit demand for families and companies are still anemia.

The new household loans were only 54.7 billion yuan ($ 7.5 billion) from January to February PBOC data. This represents the lowest level during the same period in the last two decades, according to Larry, the Chinese chief economist in Macquari, citing the recovery of the housing market.

Jason Bang, the manager of the fixed income portfolio in Asia at JP Morgan Management, said the costs of borrowing in the wider economy – which usually move alongside government bond returns – are likely to be “less for a longer period.”

While you expect the monetary policy to remain “equal”, the investment bank is “weight gain” in the 10 -year government bonds as “hedging a tariff”, expecting that revenues will circulate between 1.65 % to 2.0 %.

Home savings multiplied more than 2018 to about 151 trillion yuan last year even when banks reduced deposit rates over and over again. In the first two months of this year, Home deposits have increased By 6.13 trillion yuan.

National Financial Organizational Administration Last week He urged banks to expand the issuance of personal consumption loans, set “reasonable” credit limits and interest rates.

Several regional banks across the country dismantled cheap consumption loans with prices Low up to 2.58 % – Dramatic decrease from Loan rates are higher than 4.36 % in May 2022, according to Data from the Rong360 Digital Technology Institute.

“The loan rates are likely to remain defeated,” said Becky Liu, head of China’s total strategy at Standard Charterd.

LIU expects the government note for 10 years to result in only 1.4 % by the end of this year, as the central bank presses more cash dilution to enhance growth.

Trump’s new definitions have already known Chinese goods On the growth of exports in the country.

Consumer prices in China in February She fell into a negative area For the first time in more than a year, while producers have continued to shrink for more than two years.

In the first two months of the year, the essential inflation, which excludes volatile elements such as food and energy, is expected to expand only 0.3 %, which is HU from Macquarie, expecting that this would represent the longest contraction chain since 1993.

Certainly, “low interest rates alone are unlikely to be sufficient to stir consumption lending,” said Frederick Newman, the chief economist in Asia at HSBC, stressing that achieving such a goal requires a “high confidence” that may only happen gradually.

The majority of the wealth of Chinese families in property, however the crisis sector is still struggling to find a ground. New homes prices 4.8 % decreased in February A year ago, while investing in real estate development 9.8 % per year decreased In the first two months.

“The risk of RMB is strong in the short term,” said Joe Wang, head of strategy strategy and rates at BNP PARIBAS, referring to the American Federal Reserve Plan More scaling bonds It maintains its public budget and the high return in the long bonds in China.

“This friction may partially realize in trade (AS) that the market will realize that China has not only refrained from reducing the value of RMB despite a 20 % tariff, but it also allowed some modest appreciation of the yuan,” Wang said.

Yuan abroad has regained some land against the US dollar in recent weeks, after reaching his lowest level in 16 months in January. The last time you traded in 7,2478 against Greenback. However, we have weakened more than 2 % since US President Donald Trump’s victory in November elections.

PBOC maintained its standard 7 days the reverse ribau rate is unchanged since SeptemberIt stands 1.5 %, defying the expectations that the central bank will lead to a decrease in the stimulation of the economy. The officials have repeatedly hinted for his plan to reduce prices this year, but they have not yet followed.

the Federal Reserve In a close monitoring decision Wednesday The line is held on standard interest rates, noting that the cuts are likely later in the year.

“If the economy (China) continues to slow down, or the federal reserve is flashing, the expectations will be to reduce the rate of appearance and can decrease the bond returns again,” said Hu of Macquarie.