High demand for China state bonds sends 10-yr yields lower

A great demand for China state state bond sent yields lower to hit the lowest percentage since April 2017. 

Fundamental analysis: US investors rush for China state bonds

China's first direct bond sale in the U.S. has attracted huge demand. The government raised $6 billion in sales after attracting around $30 billion in bids to achieve lower costs of the offering.

The investment management company BlackRock is bullish on the onshore bond market in China, whose economic data and constant monetary policy backing are ensuring sustained economic rebound, said Neeraj Seth, BlackRock's head of Asian credit.

Seth pointed out that international investors have been under-invested in the Chinese domestic bond market, controlling only more than 2% of its total worth of $16 trillion. He added that foreign participation is about to rise because Chinese bonds are getting increasingly included in major global indexes.

Technical analysis: New multi-year low in yields

High demand for China state bonds has placed a strong downward pressure on the 10-year yields. Today’s low of 95.52 represents the lowest yield since April 2017.

The yields are now moving towards the 2017 lows at 93.80. A rebound in yields may push them towards 98.40. 

Summary

China's first direct sale of the government securities in the U.S. has attracted huge demand, helping the Asian superpower to raise $6 billion after attracting around $30 billion in bids.