Citi Research Bullish on China's 30-Year Government Bonds Despite Rising US Treasury Yield
Citi Research anticipates that yields on China's 30-year government bonds will continue to decrease, even as yields on US Treasury securities increase. Analysts suggest that factors such as weak credit demand, policy backing, and easing supply pressures are expected to maintain demand for long-term Chinese debt.
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According to a report from Citi Research published in the South China Morning Post, analysts have adopted a bullish stance regarding China's 30-year government bonds, forecasting that yields will decline further despite the rise in US Treasury yields.
Analysts cited weak credit demand, policy support, and easing supply pressures as factors that are expected to sustain the demand for ultra-long Chinese debt. The outlook was attributed to easing supply pressures and improved market dynamics for China's ultra-long government bonds as the fourth quarter approaches.
Rohit Garg, who serves as the head of EM Asia Rates and FX Strategy at Citi based in Singapore, noted in the report that China's recently announced recapitalization plan for certain major financial institutions, amounting to 360 billion yuan [US$53.7 billion], could potentially increase demand for duration, particularly at the ultra-long end.
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