China government bond yields finish a tad lower as liquidity conditions in the money market continue to improve amid hot money inflows, says a Shanghai-based trader with a local brokerage. The yield on the benchmark one-year government bond ends down 1 bp at 2.90%, and the seven-year bond yield is 1 bp lower at 3.40%. Meanwhile, the interbank seven-day weighted average repo, a benchmark gauge of short-term funding costs, falls 42 bps to 2.90%, after data showed the PBOC and China's financial institutions bought a net CNY21.625 billion of foreign currency in October, the second straight month of net purchases, suggesting capital has started flowing into the country. The trader says government bond yields are likely to extend losses next week if the domestic equity market remains weak.
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