Yields on China ultra-long bonds extend rises as PBOC flags interest rate risks

SHANGHAI – Yields on China’s ultra-long bonds extended their rises on Monday, after sharp jumps last week, as the country’s central bank has flagged interest rate risks to some financial institutions.

Yield on China’s benchmark 10-year government bonds CN10YT=RR rose about two basis points to 2.34% in early trade on Monday, while yield on the 30-year tenor CN30YT=RR edged up about 1.5 bps.

Yields have an inverse relation with bond prices — as the price increases, yield falls.

A branch of the People’s Bank of China (PBOC) told financial institutions to cut leverage and reduce their exposure to long-dated bonds following a feverish rally, sources told Reuters.

(Reporting by Shanghai Newsroom; Editing by Kim Coghill)