Chinese sovereign bonds slump as inflation grows at fastest pace since May; global market panic limits yield growth

The Chinese sovereign bonds slumped Wednesday after recent data showed that the world’s second-largest economy’s consumer inflation rose for the second straight month during the period of October.

The yield on the benchmark 10-year bonds, which moves inversely to its price, rose 1 basis point to 2.779 percent, the long-term 30-year bond yield climbed 1 basis point to 3.213 percent and the yield on the 7-year bonds gained 1-1/2 basis points to 2.755 percent.

China consumer price increased by 2.1 percent y/y in October after 1.9 percent y/y; in line with estimates, while producer price increased by 2.1 percent y/y in October after 0.1 percent y/y; estimates were for 0.9 percent y/y.

Moreover, global government bond yields tumbled as the United States Republican candidate Donald Trump is seen advancing further ahead of Democrat opponent Hillary Clinton in the unexpectedly close race for the White House. Currently, Trump leads in the electoral count at 244 compared to Clinton at 215. It takes 270 votes to win. Republican already won the United States House.

Meanwhile, People's Bank of China sets the USD/CNY reference rate at 6.7832, weaker than 6.7817 yesterday and injects 20 billion yuan via 7-day reverse repos.

The China's blue-chip CSI300 index fell 0.25 percent to 3,362.65 points at the end of the morning session and the Shanghai Composite Index tumbled 0.36 percent to 3,136.58 points.