China's central bank governor Zhou Xiaochuan speaks during a session on the second day of the 19th National Congress of the Communist Party of China in Beijing. Photo: Reuters/Thomas Peter

After a rough couple of days for China’s bond market, a cash injection from the People’s Bank of China has righted the ship, with yields declining for a second day in a row on Wednesday. Futures were heading for the biggest two-day advance since May as of Wednesday evening in China, according to Bloomberg.

China’s stocks have also regained some of the losses from Monday, which saw the Shanghai Composite Index slide the most in 11 weeks.

Markets have been digesting policy signals from China’s 19th Party Congress, during which officials hinted at further tightening as part of an ongoing deleveraging campaign. As Asia Unhedged noted following the Congress, PBOC Governor Zhou Xiaochuan’s comments that excess optimism could lead to a “Minsky Moment,” indicated efforts to reign in leverage will continue.

Chinese 10-year treasury bonds soared to a three-year high of 3.917% at one point on Monday, according to Reuters. After the PBOC’s cash injection, the market had steadied by Tuesday afternoon.