China 10Y Yield Hovers Near 2-Month Low

China’s 10-year government bond yield fell to around 1.67% on Thursday, nearing its lowest level since mid-June 2025, as banks increasingly turned to government debt to boost returns amid weak demand for mortgages and consumer loans. Claims on the government rose to 16.4% of lenders’ total assets in July from 11.5% five years earlier, while claims on residents fell to 16.4% from 20.3%. The shift marked the first-ever reversal between the two categories, highlighting Beijing’s struggle to revive credit demand following an unprecedented property downturn and a prolonged consumption slump. On the economic front, annual consumer inflation rose to 0.8% in August, matching market expectations and accelerating from a six-month low of 0.5% in July. Producer price inflation also picked up to 3.8% from 3.5%, surpassing expectations of 3.7%. The renewed price pressures were driven largely by higher energy costs amid ongoing tensions in the Middle East.

China’s 10-year government bond yield fell to around 1.67% on Tuesday, nearing its lowest level since mid-July, as robust trade data strengthened expectations that external demand will support economic growth. Exports surged 25.0% year-on-year to USD 401.44 billion in August 2026, accelerating from 23.9% growth in July, while imports jumped 28.2% to USD 282.4 billion, up from 27.5% in the previous month and marking an eighth consecutive month of double-digit growth. The trade surplus widened to USD 119.09 billion in August from USD 101.09 billion a year earlier, matching expectations. The solid trade performance comes as Washington intensifies pressure on Beijing to narrow trade imbalances ahead of a planned Trump-Xi meeting, while trade frictions between Beijing and Brussels are also intensifying ahead of an October deadline to address imbalances that EU leaders increasingly regard as a strategic concern.

China’s 10-year government bond yield fell to around 1.67% on Monday, hitting its lowest level since mid-July, as a fresh batch of PMI data reinforced expectations that the economic recovery is gradually gaining momentum. A private survey showed the Composite PMI rising to 52.1 in August from 50.8 in July, with growth strengthening across both manufacturing (51.5 vs 50.9) and services (51.4 vs 50.4). The upbeat reading came alongside official data showing the composite PMI edging up to 49.5 from 49.3, as manufacturing activity improved (49.8 vs 49.2), while the non-manufacturing PMI was unchanged at 49. Investors now await trade and inflation data later this week. Meanwhile, China is injecting CNY 300 billion ($45 billion) into its largest banks and insurers as part of the country’s biggest financial-sector recapitalization in nearly two decades, aimed at strengthening balance sheets and supporting credit growth amid a slowing economy.