China 10Y Yield Falls After Inflation Data

China’s 10-year government bond yield fell to around 1.63%, hitting its lowest level since February 2025 after the People’s Bank of China left its benchmark lending rates unchanged. The central bank kept the one-year loan prime rate at 3% and the five-year rate at 3.5%, holding both at record lows for a 17th consecutive month. The decision followed data showing China’s economy grew 4.5% year-over-year in Q3 2026, accelerating from a three-year low in Q2 and beating market forecasts. The rebound keeps Beijing’s full-year growth target of 4.5%–5.0% within reach, giving policymakers more room to delay broad-based monetary easing after introducing fresh targeted support measures. Separately, the PBoC said it would set up a swap facility to provide emergency liquidity support to non-bank financial institutions facing large-scale redemptions. Investors are also monitoring the Communist Party’s Fifth Plenum for policy guidance and further clarity on Beijing’s economic priorities.

China’s 10-year government bond yield rose to around 1.66% on Monday, rebounding from a more than one-year low in the previous session even as key economic data pointed to a recovery in growth momentum. China’s economy expanded 4.5% year-on-year in Q3 2026, accelerating from Q2’s three-year low of 4.3% and above market forecasts of 4.4%. Growth for the first nine months reached 4.6%, keeping the economy on track to meet the government’s full-year target of 4.5%-5%. Meanwhile, industrial output accelerated to 5.5% in September from 5.2% in August, while retail sales picked up to 1.1% from 0.4%. The surveyed urban unemployment rate also edged down to 5.2% from August’s five-month high of 5.3%. Investors will look to remarks from China’s top financial regulators at the Financial Street Forum in Beijing later today for fresh policy signals to support the economy, amid speculation about a potential shift in the policy rate benchmark from the current seven-day rate to an overnight rate.

China’s 10-year government bond yield fell to around 1.66% on Friday, hovering near its lowest level since June 2025, as a strengthening yuan and a lackluster economy bolstered demand for Chinese sovereign debt. The yield has declined 18 basis points since the end of December, while Chinese bonds have delivered nearly 10% returns over the past 12 months for dollar-based investors. Chinese bonds have also benefited from the country’s relative insulation from rising oil prices, supported by substantial strategic reserves and the continued shift toward electrified transport. Beijing’s efforts to attract more foreign investors to its domestic bond market are providing another source of support as China seeks to expand the yuan’s international role. The rally has widened the yield gap between Chinese and US government bonds to a record this month, with China’s 10-year yield at 1.67%, 352 basis points below that of comparable-maturity US Treasuries.