China 10-Year Yield Stuck in Tight Range

China’s 10-year government bond yield traded to around 1.77%, holding within the narrow 1.6% to 1.9% range that has defined the market this year.

Traders have faced their toughest conditions in a decade, with subdued volatility and limited arbitrage opportunities as a languid economy and steady monetary policy stalled the multi-year rally.

Nearly 300 bond funds have posted paper losses this year, while an index tracking pure bond funds is on track for its worst performance in a decade.

Sentiment was further restrained ahead of this week’s loan prime rate decision, where expectations for no change reinforced the sense of stagnation.

Market participants now weighed the likelihood of fresh policy support from Beijing to bolster growth and offset US tariff headwinds after recent data showed weaker factory activity and slowing retail sales.

Globally, focus turns to the Fed’s Jackson Hole meeting and a Trump-Zelenskiy gathering in Washington.