China’s sovereign bonds rallied, while its yuan weakened toward a closely watched-level after the central bank unexpectedly cut a policy rate. Property stocks also gained on hope of more stimulus.
The yield on 10-year government bonds fell four basis points to 2.63%, a nine-month low. The offshore yuan dropped 0.2% to 7.1706 against the dollar, nearing the 7.2 mark, with a similar decline onshore. A Bloomberg gauge of property stocks gained as much as 2.2% before paring.
The People’s Bank of China reduced the interest rate on its seven-day liquidity tool on Tuesday, the first time since August, as economic growth stuttered. Analysts said the central bank may also cut the rate on the medium-term lending facility on Thursday.
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