China government bonds close higher amid abundant liquidity in the money market and ongoing concerns over the country's slowing economy, says a Shenzhen-based trader with a local brokerage. The Shanghai exchange government bond index ends at 133.17 vs 133.15 at Tuesday's close; meanwhile, the interbank seven-day weighted average repo, a benchmark gauge of short-term funding costs, falls 21 bps to 2.23%, the lowest level in more than 13 months. "The continued decline in the seven-day repo rate suggested investors are increasingly reluctant to buy riskier assets and they only want to hold cash or government bonds," the trader says. He reckons bond prices will extend gains in the near term if there are no signals that China's economy is improving in May.
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