Something odd happened in China today – the government wanted to sell $4.09 billion of debt securities but couldn’t find enough buyers. So, it settled on selling $4.03 billion. It’s not a huge failure – it sold 98.5% of what it had planned – but the development is an interesting one, especially if it is repeated Thursday when three-month bills are slated for sale.
The word out of Shanghai earlier was that investors were concerned that the one-year bills with a coupon of 1.06% didn’t offer enough yield for those worried about inflation. That may be true but China has reported four straight months of a decline in its consumer price index, a barometer used to measure inflationary pressures.