China Floods Market With $84 Billion to Avert Bond Crisis
Facing mounting pressure in its bond markets, China’s central bank has stepped in with its largest cash injection in months—over $84 billion—seeking to contain a spiraling selloff in long-term debt.
Bond yields had been climbing for days, with 30-year government bonds under heavy selling pressure. Friday’s liquidity move, delivered via reverse repo agreements, marked the biggest daily stimulus since January and helped halt the slide—for now.
Behind the turmoil is a mix of growing investor redemptions, poor sentiment over the economy, and competing capital flows toward a resurgent stock market. Analysts say redemptions are snowballing, forcing funds to dump bonds into a falling market and deepening the damage.
A massive 120 billion yuan exited bond funds within just three days, and nearly all medium- to long-term mutual bond funds posted losses earlier this week. Yields are rising fast: buyers demanded 1.97% on new 30-year sovereign bonds, the highest in months. Corporate credit isn’t faring better, with top-rated bonds also facing higher borrowing costs.
Without continued intervention—either through more liquidity or broader market balancing—analysts warn the bond rout could turn systemic.
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