10 basis points might not be the biggest one day change ever for borrowing cost in China's vast 7-trillion bond market,

but it was enough on Monday to push the country's closely watched onshore repo rate back from Friday's 8-month high.

That gives investors a little breathing space to consider what next for the rising tensions and onshore bond markets.

One thing they should consider is their own leverage as well as their fears for companies.

Bond yields in China had been rising rapidly.

This month China's 5-year government bond yield has risen 25 basis points at 2.75%, its worse monthly performance in a year.

Defaults by two state-owned groups have also raised fears that others will also follow suit.

All this is added roughly half a percentage point this month alone for high quality corporate borrowers and spooked by this,

companies have so far suspended plans for an estimated 10 billion in expected bond issuance.

And middle of the furore about the pain of rising rates,

one so far overlooked factor is that investors as well as companies appear precariously balanced.

The market for pledge-style repos, which are short-term bond backed loans, is currently bigger than the actual stock of outstanding debt.

Sharp worsening in market sentiment could force those borrowers into fire sales if their loans are called or cannot even just be rolled over.

And the bond fund inflows that followed last summer's stock market rout are also at risk of reversing.

Since China's bond markets are not quite as liquid as their size might suggest,

firm managers facing redemptions could be forced to dump what they can rather than what they should or would like to sell.

This potential for a market rout makes the 7-day repo rate more important than ever.

Long considered a gauge of official views on the health of the bond market,

the rate reached 2.55% on Friday before dropping to 2.45% on Monday.

So long as the PBOC, the People's Bank of China, injected enough money to keep the rate roughly in this range between 2.25 and 2.5%,

the worst sell off fears should be kept at bay.

But if it moves and stays sharply higher, leveraged investors would be in for a shock,

And given the impact that any Chinese turmoil now seems to have on world markets, that means investors elsewhere, too.