The People’s Bank of China has conducted a survey of mutual funds on long-term government bond investment, people familiar with the matter said. The survey focused mainly on 10-year and 30-year bonds and included questions about duration risk and appropriate yield levels.
The People’s Bank of China has conducted a survey of mutual funds on long-term government bond investment, people familiar with the matter said. The survey focuses mainly on 10-year and 30-year bonds, and is also expected to examine duration mismatch risk in mutual funds’ investment portfolios.
Market participants said they were also asked about such matters as recent market volatility and the yield levels that fund managers consider appropriate for long-term bonds.
Long-term bond prices have risen over the past month, amid growing expectations of monetary policy support on the back of weak economic indicators. The 10-year bond yield reached 1.68% this week, while the 30-year bond yield reached 2.13%.
The yield spread between 1-year and 10-year bonds has narrowed to 48 basis points. That is its narrowest level since early March, after widening to 60 bp in early July.