China government bond futures drop after weak auction

SHANGHAI: Chinese government bond futures fell on Wednesday afternoon after a government bond auction met with tepid demand.

Chinese 10-year Treasury futures for June delivery, the most-traded contract, fell more than 0.6 percent at one point, before recovering slightly. They were last down 0.47 percent at 96.825.

The finance ministry reopened three-year and seven-year bonds, selling 48 billion yuan ($7.16 billion) each on Wednesday morning. But auction yields for both bonds came in much higher than market forecasts.

A trader at a brokerage house in Shanghai said the treasury auction results came in beyond expectations and "crashed market confidence".

After the auction, the 10-year government bond traded in the interbank market also fell, with its yield rising about 5 basis points to 3.22 percent, traders said.