China Bonds Drop Most in Two Weeks as PBOC Optimism Reined In
- PBOC's Ma highlights risks stemming from reserve-ratio cuts
- Ten-year yield rises from near lowest level since January 2009
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China’s 10-year bonds dropped the most in two weeks as the central bank’s chief economist damped speculation lenders’ reserve-requirement ratios will be eased by saying any adjustments should avoid causing too much volatility to short-term rates.
In deciding on changes, maintaining stable money rates should be considered a priority as inappropriate timing and scale can lead to unwanted policy transmissions into the real economy, Ma Jun, chief economist of the People’s Bank of China’s research bureau, wrote in a commentary. Excessive cuts may also worsen capital outflows, alleviating the intended impact of improving liquidity, he wrote in the Financial News newspaper.