China’s Central Bank Intervenes to Halt Bond Market Panic

China's central bank unleashed its largest liquidity injection since January, pumping 601.8 billion yuan ($83 billion) into markets to stem a worsening bond selloff. The emergency measure followed seven consecutive days of rising yields on 30-year government debt—a streak that finally broke on Friday.

Futures tied to long-dated bonds simultaneously paused their 24-month losing streak, but not before triggering alarm bells at the People's Bank of China. "When redemptions start snowballing, markets don't self-correct—they spiral," warned Huatai Securities analyst Zhang Jiqiang. His team noted fixed-income fund withdrawals Thursday hit October-level extremes as retail investors fled en masse.

The rout exposes deepening cracks in China's financial architecture. Trade tensions with Washington and Beijing's deflation battle have eroded bond appeal, while fund holdings nearly doubling since 2022 amplified the selloff's velocity. Each redemption forces more bond liquidations, creating a vicious cycle of falling prices and fleeing capital.