China central bank urges caution on rate risks in bond market

After sharp yield drop, PBOC tells banks it has zero tolerance for 'misbehaviors'

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The People's Bank of China recently held meetings with financial institutions that were engaged in aggressive bond trading in the current rally, according to a central bank publication. © Reuters

SHANGHAI (Reuters) -- China's central bank on Wednesday urged financial institutions to guard against interest rate risks when trading in bonds, signaling discomfort among policymakers over recent frenzied buying that has helped drive yields sharply lower.

The People's Bank of China (PBOC) held meetings with some financial institutions who were engaged in aggressive bond trading activity in the current rally, the Financial News, a central bank publication, reported.

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