Yes Virginia,There Is A Market

Bloomberg noticed that interest rates went up in China.

How China’s Interest-Rate Cut Raised Borrowing Costs

What if a central bank cut interest rates and borrowing costs rose?

Since the People’s Bank of China surprised markets with the first benchmark rate reduction in two years on Nov. 21, the five-year sovereign bond yield climbed 15 basis points, that for similar AAA corporate notes surged 37 and AA debt yields jumped 76.

In the past four weeks, I've posted: Deposit Rates Go Up in China
Reality in China: Banks May Eliminate Rate Cuts
Deposit Competition Begins: Some Chinese Banks Hike Long Term Deposit Rates

Rates went up immediately due to the increased role of the market in setting interest rates. Nominal interest rates are much higher in the private Chinese economy. Ignoring current economic trends, if the Chinese economy opens up and allows a greater role for private companies (as is happening), interest rates would rise without an offsetting inflow of capital, artificial or real. Since foreign investment is falling.....

Moreover, China's push for a bull market rally had consequences too. Also Bloomberg: China’s Stocks Sink Most Since 2009 as Turnover Jumps to Record

The nation’s clearing agency for exchanges has stopped accepting new applications for repurchase agreements that involve bonds rated below AAA or sold by issuers graded lower than AA, according to a statement yesterday. The move will help remove riskier debt from the repo market before China requires local government financing vehicles to clarify next month which bonds are backed by the state, according to Guotai Junan Securities Co.

The yield on Kashi Urban Construction Investment Group Co.’s 800 million yuan of debt due November 2019 climbed 75 basis points to 7.17 percent, the biggest jump since July, exchange data show. Kashi Urban Construction is an LGFV.

One-year interest-rate swaps, the fixed payment to receive the floating seven-day repurchase rate, jumped as much as 29 basis points to 3.67 percent, the highest since August.

It also doesn't help that China still tries to manipulate the market. As ZeroHedge noted: When Central-Planning Fails: "Stimulative" Chinese Rate Cuts Spark Surge In Borrowing Costs

The reason is simple - the leveraged-speculative surge into Chinese stocks triggered by the "easy" rate-cuts sparked a major rotation from bonds into stocks - which forced the PBOC to stymie leveraged-trading and implicitly tighten financial conditions dramatically for the stressed corporate bond market.

China's rate cut does not signal good news for the market; it signals the central bank is finally coming around to the reality of economic weakness. Credit is tight and the push for a bull market, while it can alleviate some funding needs for financial firms, has unintended consequences for the bond market. Policy makers are constrained by the market and there's no painless way out.