The Impact of the New Crown Epidemic on the Chinese Government Bond Market

Abstract

Treasury bonds are a source of funds obtained by a government on a borrow-and- repay basis and are a form of reimbursable, non-recurring fiscal revenue whose main functions are to cover fiscal deficits, raise construction funds, regulate money supply and interest rates and control the macro economy. When the Treasury Bond Index rises it indicates a better developed bond market in China, while a rising bond index also indicates falling interest rates and easing liquidity. For individual investors, a rise in the treasury bond index causes bond market interest rates to fall, treasury bond rates to fall and investors' expected returns from investing in treasury bonds to fall. Conversely, when the Treasury Bond Index falls, it means that the bond market is less developed. At the same time, a falling bond index also indicates rising interest rates and tight liquidity, and if the Treasury Bond Index falls for a long period of time, it will mean that inflationary expectations gradually decrease. For individual investors, a falling Treasury Bond Index causes bond market interest rates to rise, Treasury bond interest rates to rise, and investors' expected returns from investing in Treasury bonds to increase accordingly. Data from Baidu Stock Market Access.