China Bonds Rally as Bank Deposit-Rate Cuts Fuel Easing Bets

(Bloomberg) — China’s government bonds extended a rally, and bank shares advanced after authorities told commercial lenders to cap some interest rates on deposits in a push to support a bumpy economic recovery.

The yield on 10-year notes dipped 2 basis points, or 0.02 of a percentage point, Thursday to the lowest since November, and a gauge of Chinese financial stocks jumped as much as 1.5%. The country’s biggest state-owned banks were permitted to lower interest rates on so-called agreement and call deposits, according to a notice seen by Bloomberg News. The move will help drive down their costs, giving them scope to lower interest rates on loans and help spur lending in the economy.