China asks banks to report on liquidity after sudden bond slump – Bloomberg

“Chinese regulators asked banks to report on their ability to meet short-term obligations after a rapid selloff in bonds triggered a flood of investor withdrawals from fixed-income products, according to people familiar with the matter,” reported Bloomberg during early Thursday.

The news also mentioned that the unscheduled regulatory queries coincided with the biggest slump in China’s short-term government debt since mid-2020.

Bloomberg also mentioned that the rout, spurred by a shift toward riskier assets including stocks, prompted retail investors to pull money from wealth-management products, fueling a spiral of price declines and accelerating withdrawals. “Losses also spread to top-rated corporate bonds, stoking a record surge in yields this week,” adds the news.

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