(Bloomberg) -- The yield on China’s benchmark bond fell to a more than two decade low as investors continued to flock to the notes amid lingering concerns about the domestic economy and expectations for further stimulus.

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The onshore 10-year government yield slipped to 2.22%, the lowest since 2002. Yields on the 20- and 50- year bonds have been trading at their historic lows for months.

The bonds have staged a sizzling rally on the back of China’s lackluster economic growth, dovish monetary policy and the impact of ample liquidity in the banking system with loan demand so weak. A increase in borrowing to ramp up fiscal stimulus has failed to deter investors.

“With risk sentiment staying subdued while expectation is still for some form of monetary policy support, there are safe haven flows into CGBs as there is probably a lack of better investment alternatives as seen by investors at the momentum,” said Frances Cheung, a strategist at Oversea-Chinese Banking Corp. in Singapore. “We however caution against chasing long end yields lower as at these levels, they appear overly low compared to potential GDP growth.”

The move came as the People’s Bank of China set the yuan’s daily reference rate weaker for a sixth straight session, with the currency also under pressure from pessimism toward the economy. The PBOC has been trying to manage a gradual decline as persistent strength in the US dollar weighs on Asian currencies from the yen to the Indonesian rupiah.

Former officials have called for authorities to relax control of the yuan to provide more room for monetary stimulus.

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China’s central bank has been ramping up a verbal pushback against the bond rally and has hinted it may sell some of its own holdings to cool the advance.

“We think at one point the PBOC will be concerned and may do something, including tighten front-end liquidity or even CGB selling to slow the rates drop,” said Stephen Chiu, chief Asian foreign-exchange strategist at Bloomberg Intelligence. “Though in the long run, rates downtrend should be the norm.”

--With assistance from Wenjin Lv.

(Updates with context from currency market)

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