PBOC June Government Bond Purchases Drop to Nine-Month Low
0xBroomberg
The PBOC bought just RMB 10 billion in government bonds in June, down 80% from May's RMB 50 billion and the lowest since it resumed purchases; this signals the central bank is deliberately easing off to keep yields from falling further.
How much did purchases drop?
June net purchases hit RMB 10 billion (about $1.47 billion), down from RMB 50 billion in May — an 80% cut in one month.
That is the lowest monthly figure since the PBOC (中国人民银行) resumed bond buying in October 2025.
This means → the PBOC hasn't stopped, but it barely tapped the accelerator — the signal matters more than the size.
Why the sudden pullback?
Wang Qing, chief macro analyst at Golden Credit Rating (东方金诚), says the PBOC wants bond yields to stay broadly stable rather than drift lower.
In plain terms = yields falling too far would make money "too cheap," risking asset bubbles or idle capital sloshing through the system.
A second factor: the PBOC launched an overnight open-market operation tool late last month — a new ultra-short-term instrument that partly replaces the need to buy bonds to manage longer-term liquidity.
What yield level would trigger a bigger move?
Wang notes that if the 10-year government bond yield drops below 1.70%, the PBOC may suspend bond trading again — much as it did from January to September 2025.
This reflects the central bank's bottom line: support ample liquidity, but never allow excess liquidity or a sharp drop in borrowing costs.
In plain terms = the PBOC is willing to water the garden, but refuses to flood it.
What is the bigger picture on PBOC bond buying?
The PBOC began buying and selling government bonds on the secondary market in 2024, following a proposal by President Xi Jinping.
Its scale remains far smaller than the Fed's operations in U.S. Treasuries — this is not China's version of QE (quantitative easing — large-scale central bank asset purchases to inject money into the system).
This means → the PBOC treats bond trading as a precision-tuning tool, not a firehose.
Content is for reference only, not financial advice.