(March 9): Chinese government bonds slumped on Monday (March 9), joining a global debt selloff as surging oil prices spur concern over imported inflation.
Futures on 30-year government bonds dropped as much as 1%, the most since late December. Yields on the 30-year bonds gained three basis points while those on the 10-year note rose two basis points.
Traders are shunning debt as oil extends its surge past US$100, triggering broad panic in Asia over commodity import costs. This surge threatens to limit the scope for central bank monetary easing and dampen regional growth.
“The China government bond market takes its cue from the global theme of inflation fear while domestically bond supply is also likely to lead to a steeper curve,” said Frances Cheung, head of FX and rates at Oversea-Chinese Banking Corp.
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