Highlights from the February report

  • China’s US$12 trillion bond market is projected to double in size in the next four years to about US$24 trillion, according to Goldman Sachs. Chinese Government Bonds (CGBs) are forecast to account for an estimated US$4 trillion of that market by the end of 2022
  • Despite growth in its bond market, China’s currency – the renminbi (RMB) – is depreciating on the back of trade tensions and slower macroeconomic growth. The RMB hit a 10-year low in late October 2018; and the interest rate gap between China and the US narrowed due in part to the Federal Reserve’s tightening policies
  • Meanwhile, yields on sovereign debt continue to fall in China at a time when yields on similar debt of many other major economies are rising due to an uncertain outlook for the global economy. As of end-2018, the yield on China’s 10-year sovereign notes had tumbled 63bps since the beginning of last year.