Since July, China’s bond market has traded choppily: falls in ultra‑long
government bond yields compressed long‑end spreads and lifted long‑duration
asset prices. Mid‑to‑long duration pure bond funds outperformed short‑term funds
in July, with the top monthly return at 5.45%. Market action has been more
structural, limiting institutional follow‑through and leaving allocation demand
muted. Market participants recommend extending duration to preserve liquidity.
Everbright Futures notes that accelerated fiscal spending and faster use of bond
proceeds have strengthened expectations of a government bond supply peak, which
will temporarily raise market absorption pressure. At the same time, 1H GDP
growth remained within the annual target, external demand showed resilience, and
new drivers such as the digital economy continued to expand, so the economy
faces no obvious deep downside. Against this backdrop, short‑term policy is
likely to focus on accelerating implementation of existing measures, and neither
a sustained one‑way rise nor fall in interest rates looks likely.
