SHANGHAI: China's long-dated government bond yields rose in early trade on Friday, as traders heeded the central bank's fresh warning against risks in the country's bullish treasuries market.
The People's Bank of China (PBOC) said on Thursday it was paying close attention to bond market changes and potential risks, and would sell government bonds when necessary.
The message was later reiterated in the Financial News, a publication affiliated with the PBOC.
The yield on China's 10-year government bonds climbed 2.55 basis points in early trade to 2.33 per cent in the interbank market.
The yield on 30-year treasuries rose more than four basis points at one point to 2.585 per cent. Bond yields move inversely to prices.
The message "shows that the central bank is still seeking to prevent long-term yields from falling below a certain level," analysts at Nanhua Futures said in a client note.
The brokerage expects bond prices to fluctuate and recommended investors buy on dips.
Some traders said they were somewhat confused by the central bank's gesture.
"The PBOC wants to talk up interest rates at a time when the economy is still struggling," said a hedge fund manager who declined to be identified as they were not authorised to speak to media.
"It's perplexing as higher rates are not good for property market recovery, and could worsen local government debt woes."
The PBOC has repeatedly cautioned against risks in China's bullish bond market - a haven for investors fleeing the country's crisis-hit property market and volatile stocks.
