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Global investors drive record inflows into Chinese bonds in July

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SHANGHAI: Overseas investors made record web purchases of Chinese bonds traded by the nation’s Bond Join programme in July, boosted by record yield premiums over U.S. debt.

Internet inflows into Chinese bonds by Bond Join, which provides international investors entry to the nation’s onshore bond market by Hong Kong, totalled 75.5 billion yuan ($10.83 billion) in July, Bond Join Co. mentioned in an announcement dated Friday.

Bond Join Co. is a three way partnership between the China Overseas Trade Commerce System (CFETS) and Hong Kong Exchanges and Clearing Ltd.

Whole trading volumes stood at 446.9 billion yuan in July, Bond Join Co. mentioned. That was up 5.9% from a month earlier, however beneath a record 478.2 billion yuan in March, when the fast worldwide unfold of the brand new coronavirus drove a world flight to security.

Spreads between benchmark Chinese 10-year authorities bonds and their U.S. equivalents touched a record excessive in of greater than 257 foundation factors in July, Refinitiv information confirmed.

Analysts say widening spreads mirror the differing approaches of the U.S. and Chinese central banks. The Federal Reserve is dealing with dimming hopes for a fast financial rebound, whereas China is steadily recovering from the coronavirus disaster, permitting the Folks’s Financial institution of China (PBOC) to change from emergency mode to focus extra on monetary dangers and curbing hypothesis.

The Consumed Wednesday stored rates of interest close to zero and pledged to proceed pumping money into the economic system because the COVID-19 pandemic wreaks havoc on enterprise and shopper spending.

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