China’s opening news causes turbulence in the bond market

Global bond prices slide in light trading as investors fear China’s decision to open both importing and exporting countries will lead to a rise in global inflation. The decline in bond prices caused bond yields to rise. This is because bond prices and bond yields move in opposite directions. European bond yields are rising the most.

The yield on 30-year German government bonds rose by 0.18% to 2.44%, its highest level since October. The yield on 30-year treasury notes rose by 0.11% to 3.94% and the yield on 10-year treasury notes rose by 0.10% to 3.85%.

Trading volumes in global bond markets are low as markets in many countries, including the UK, remain closed over Christmas.

China announced that it would open up the country earlier than expected, both for entry and exit. Quarantine measures for travelers from abroad will be lifted. This will be effective from January 8, 2023, after being enforced for three years to contain the spread of COVID-19. At the same time, China will resume issuing visas for mainland Chinese citizens to travel abroad from January 8, 2023. On top of that, China will downgrade the handling of COVID-19 from the current Category A, the highest level of protection, to Category B.

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