Monthly report overview
China continues to navigate inflation and growth challenges, as Fed pivots
The PBoC maintained its easy monetary policy in 2023, reducing policy rates and providing liquidity to the banking system. China also eased fiscal policy, funded by more bond issuance in Q4. The Chinese yield curve flattened vs the US inverted curve. Chinese $ HY credit made further losses in 2023, after a Q4 rally.
Key highlights:
- Macroeconomic backdrop − Fed pivot indicates narrower policy gap between China and the US
- Chinese bonds − Longer Chinese bond yields fell further in 2023, driving 10s/2s bull flattening
- Chinese and Asian bonds − Asian yields ended 2023 lower, after sharp falls in Q4
- Performance − Developed Asian bonds outperformed in Q4, while Indonesian and Indian bonds outperformed YTD
This report provides actionable insights on currency-adjusted performance, macro drivers, shifts in yields, spreads and curves across conventional government and corporate bonds, for both renminbi and dollar-denominated issues.
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