China’s central bank suspends purchases of government bonds citing inventory shortages Reuters

SHANGHAI (Reuters) – China’s central bank said on Friday it had decided to temporarily suspend government bond purchases due to insufficient bond supply, prompting a jump in maturity yields.

The People’s Bank of China (PBOC) said in a statement that it will continue to buy bonds depending on supply and demand in the government bond market.

The decision followed repeated warnings from the PBOC about the risks of a bubble in China’s red-hot bond market, where long-term yields have repeatedly fallen to record lows.

Yields, which move inversely with bond prices, jumped after the central bank’s announcement.

China’s 30-year Treasury yield was up five basis points in early trade, while the 10-year yield was up four basis points.