SHANGHAI, June 18 (Reuters) - China's 30-year government bond yield fell below 2.5% in early trade on Tuesday to the lowest in seven weeks, reflecting persistently strong demand for long-dated treasuries despite regulators' repeated warnings on investment risks.
The yield falling below the psychologically key 2.5% level for 30-year treasuries could reinforce expectations that China's central bank could take more steps to cool feverish buying, including directly selling bonds in the market.
Bond prices had a long bullish streak this year, pushing down yields, as investors seek a safe haven in fixed-income products amid a wobbly economy and volatile stock markets.
Long-dated yields had rebounded after the People's Bank of China said last month it would sell government bonds when necessary, urging investors to pay close attention to potential risks in the treasuries market.
Traders say the renewed decline in yields is partly driven by expectations that bank deposit rates will fall further, potentially driving more money into the bond market.
"There's too much liquidity," a bond trader said on condition of anonymity. "Any positive news would trigger a spurt of buying." (Reporting by Shanghai newsroom; Editing by Christian Schmollinger)
