China’s central bank is committed to ensuring a normal upward-sloping yield curve and addressing bond-market risks, according to a report by the Financial News. The People’s Bank of China has expressed concerns about the bond market and plans to sell treasury bonds to prevent a bond rally.
Industry sources warn that the bond market may not continue to rise indefinitely, and there is a growing risk of a market reversal. Some rural commercial banks have a high exposure to medium- and long-term treasury bonds, which could lead to losses if interest rates rise sharply.
PBOC Governor Pan Gongsheng has emphasized the importance of addressing risks in the bond market to avoid a situation similar to the collapse of a U.S. bank last year. The central bank has indicated that it has a significant amount of bonds available for borrowing and selling to balance market supply and demand.
Experts believe that selling treasury bonds will help prevent risks in the bond market and maintain liquidity conditions. Overall, the central bank’s goal is to ensure a stable and healthy bond market.