Analysis: What’s Causing China’s Bond Rally and Falling Currency

China’s recent bond rally and yuan depreciation have captured market attention. This article analyzes the underlying causes and explores potential future developments.

Bond market’s new catalysts

China’s bond market has generally rallied since late September, with prices rising and yields falling. Since late November, new catalysts have emerged that are accelerating the downward trend in yields. The yield on the 10-year government bond dropped to a record low of 2% Monday.