Halister News

(Bloomberg) -- Chinese authorities’ determination to make further progress on deleveraging will be a key constraint for onshore bonds in 4Q, according to a Bloomberg survey where nearly two-thirds of respondents expect 10-year yields to stay rangebound next quarter.

• 29.4% expect lower yields while 5.9% predicted higher rates
  • 17 respondents participated in the Bloomberg survey conducted from Sept. 22 to Sept. 26
• 10-year govt bond yield forecast at 2.7% by end-4Q and may hit as low as 2.6% during this period, according to median est. in survey
• Factors which may limit downside for bond yields include:
  • Officials’ determination to deleverage - 35.3% of participants
  • Growth stabilization - 23.5% of participants
  • Fed’s rate hike, onshore liquidity tightening
• 60% expect PBOC to combine 7-, 14- and 28-day reverse repos
  • NOTE: Yield on 2.74% govt bond due August 2026 rises 1 bp to 2.725% as of Sept. 27