China's yield curve is steepest in two years as liquidity swells

Longer yields are being kept from falling due to expectations for economic recovery and the prospect of additional debt issuance

China’s yield curve has become the steepest in two years as a combination of flush liquidity and speculation the central bank will keep policy accommodative pushes down rates on shorter-maturity debt.

The extra yield on the nation’s 10-year bonds over one-year securities widened to 93 basis points this week, the most since June 2020, and up from as little as 45 basis points in December. At the same time, longer yields are being kept from falling due to expectations for an economic recovery and the prospect of additional debt issuance.

The nation’s shorter bonds have surged since the