(Updates prices at 1000 GMT)
SHANGHAI, March 6 (Reuters) - Chinese government bond
yields declined on Wednesday with the 10-year yield falling to a
22-year low on expectations that authorities will keep monetary
conditions easy as they aim to revive domestic consumption and
meet economic growth targets.
The 10-year government bond yield fell to
2.283%, the lowest since April 2002. The yield has fallen 27
basis points from levels of 2.55% at the end of January.
At its annual National People's Congress (NPC), which
started on Tuesday, China announced a 2024 economic growth
target of around 5%, a tight fiscal deficit target of 3% of GDP
and plans to keep fiscal policy "pro-active".
Expectations are for monetary policy also to be supportive.
Many analysts have described the 5% target as ambitious if
there isn't more stimulus.
People's Bank of China Governor Pan Gongsheng said in a
press conference on Wednesday that there is room to further cut
banks' reserve requirements.
Pan's comments spurred investors' expectations for
further cuts in bank reserve ratios and improved funding
conditions and pushed yields lower across the curve, said Zou
Wang, an investment director at Shanghai Anfang Private Fund
Management.
The 30-year government bond yield fell to a
record low of 2.4375%, according to brokers' quotes from
platform Dealing Matrix.
Yields in the world's second-largest economy have fallen
steadily after China's benchmark lending rates were cut sharply
last month.
The rush into bonds has pushed 10-year yields
below rates on the central bank's lending facility
and caused spreads between 10 and 1-year bonds
to shrink by 10 basis points in two weeks.
At the NPC, China also announced plans to issue 1 trillion
yuan ($139 billion) of special ultra-long term treasury bonds,
which are not included in the budget.
These ultra-long term special bonds will support
technological innovation, energy security and other areas, the
head of the state planner National Development and Reform
Commission (NDRC) told a news conference in Beijing on
Wednesday.
Societe Generale analysts said that decision to issue
more ultra-long bonds, possibly for the next few years, meant
the current strong domestic
appetite
for bonds with tenors of 30-years and more "is likely to
diminish from this point onwards".