10year yield falls as low as 1.9750; futures hit record high
Rally seen continuing in 2025 on weak economic growth outlook
Friday39;s ban on preferential deposit rates added momentum to bond rally

SHANGHAI, Dec 2 Reuters China39;s 10year yield dropped below 2 to hit its lowest point on record on Monday, breaking a psychological barrier as a sputtering economy and bets on further rate cuts drive investors into the safety of bonds.

Prices in China39;s bond market have been on a decadelong rally one that kicked into a higher gear roughly two years ago as the country39;s property sector woes and weakness in the stock market combined to prompt a flood of funds flowing into bank deposits and the debt market.

A ban on offering preferential deposit rates on Friday was the latest signal that rates are staying low.

Benchmark 10year yields dropped 5 basis points bps to 1.9750 in Monday afternoon trade. That39;s the lowest point in data from China Central Depository Clearing that stretches to 2002 and marks only a handful of times that the yield has been below 2.

Despite efforts from authorities to restrain the bond rally, including episodes of central bank selling and an increase in issuance, investor appetite seems insatiable and analysts expect the rally to continue into next year.

Fundamentals are still very weak. Policies are merely support to prevent the economy from a hard landing, not a strong stimulus, said Ke Zong, a former portfolio manager at hedge fund…