China’s financial regulator has instructed some rural banks to shorten the average duration of their bond holdings to stabilize the banking sector amid a bond market rally, according to sources. The National Financial Regulatory Administration conducted checks on banks’ bond investments, complementing a similar initiative by the People’s Bank of China (PBOC). The central bank also announced it could sell “hundreds of billions” of yuan in securities to temper the rally driven by economic concerns and limited investment alternatives. PBOC governor Pan Gongsheng expressed caution over potential interest-rate risks for holders of long-term bonds and emphasised timely intervention to mitigate financial market risks. The benchmark 10-year yield in China remains near a record low, indicating persistent market pressures.