Chart of the day: Bonds rally for new governor

Last week, Yi Gang was appointed as governor of the People’s Bank of China, replacing retiring Zhou Xiaochuan, who had held the post since 2002. Luckily for the new kid on the block, the 10-year bond futures prices simultaneously rallied strongly, slicing quickly through long-term trend-line resistance and gapping higher on Friday on good volume to test horizontal resistance. Benchmark yields are reflecting this new bullish phase, with 10-year yields dropping steadily from 4 per cent to 3.75 per cent. We shall allow for a little hesitation at around 94.225 yuan (US$15) before a gradual rally towards last year’s high of 97.90 yuan. Do not expect heavy volume as this is more common in bear markets.

Nicole Elliott is a technical analyst