The PBOC again faces the question of whether to intervene as China’s 10-year government bond yield approaches its historic low, a situation that prompted the central bank to suspend bond purchases in early 2025. Attempts to suppress this market signal would not address weak domestic demand or change investors’ expectations of China’s economic outlook. And with currency pressures having eased and the PBOC appearing more tolerant of gradual falls in yields, we think intervention is less likely this time.
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