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Citi turns bullish on China’s 30-year bonds as yields are set to fall

Citi said demand for ultra-long duration could get a boost from China’s 360 billion yuan recapitalisation plan for some financial institutions.

Reported · Written up by our desk · Government Bonds

Citi Research has turned bullish on China’s 30-year government bonds, projecting yields could fall further even as US Treasury yields rise, according to a note cited by SCMP Economy. The bank recommended that investors go long on China’s 30-year sovereign debt.

Citi analysts forecast the 30-year bond yield could move toward 1.8 percent, while the 10-year yield could edge toward 1.6 percent.

The outlook is tied to easing supply pressures and improving market dynamics for China’s ultra-long government bonds heading into the fourth quarter, SCMP Economy reported.

Citi pointed to China’s recently announced 360 billion yuan recapitalisation plan for some major financial institutions as a potential driver of duration demand, particularly at the ultra-long end, according to the cited report by Citi’s Rohit Garg.

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