Market watchers speculate that the People’s Bank of China may have bought government bonds from domestic banks in July, deviating from a longstanding position against mirroring developed market central banking behavior.
Sovereign bond holdings categorized as «other» investors, which includes central banks and clearing houses, climbed over 12 percent to reach 1.78 trillion yuan ($256 billion), according to data from the China Central Depository & Clearing.
The 196.5 billion yuan ($28.3 billion) in bond purchases mark the largest bump in the «others» category since the data was first compiled by Bloomberg in 2018.
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The move prompted various research analysts from Citic, Nomura and more to speculate that the People’s Bank of China (PBoC) may be purchasing bonds. Separately, the PBoC also said in a report last week that it would work with the Ministry of Finance to smooth government bond sales without providing additional details.
Should the holdings belong to the PBoC, this would deviate from traditional policymakers' stance against mirroring the bond-purchasing programs enacted by developed markets elsewhere.
By law in China, the PBoC is prohibited from purchasing government debt directly from the primary market.
