China 10Y Yield Extends Fall to 2-Week Lows

China’s 10-year government bond yield steadied around 1.82% on Thursday, following two consecutive sessions of gains as investors weighed mixed PMI data. A private survey showed manufacturing PMI slipped to 50.8 in March from 52.1 in the previous month, signaling a moderation in factory activity. In contrast, official figures reported manufacturing PMI at a one-year high of 50.4, while the non-manufacturing PMI rose to 50.1, signaling renewed growth across both sub-sectors. The return of expansion in both sectors was supported by government stimulus measures, strong holiday spending, and robust exports despite ongoing global supply chain disruptions and energy market volatility. However, while Chinese policymakers have emphasized boosting domestic consumption and reducing reliance on foreign demand, external headwinds, particularly the ongoing Middle East conflict, could weigh on business activity in the coming months.

China’s 10-year government bond yield edged lower to around 1.81% on Monday, marking its lowest level in nearly three weeks as investors sought safer assets amid concerns that the ongoing Middle East war could derail global economic growth. The conflict has entered its fifth week, with President Trump warning that the US could “take the oil in Iran,” including seizing Kharg Island. Tensions have further escalated as Iran-aligned Houthi forces launched missiles toward Israel. In China, Premier Li Qiang outlined a GDP growth target of 4.5%-5% for 2026, emphasizing that policymakers will “strive for better outcomes in actual implementation.” He also noted that achieving the 2% inflation target will be challenging, as price growth in 2025 was close to zero amid weak domestic demand. Against this backdrop, China’s monetary policy is expected to remain supportive and moderately accommodative until a clearer recovery in prices takes hold, providing a stable environment for the bond market.

China’s 10-year government bond yield edged higher to around 1.81% on Friday, rebounding from a two-week low hit in the previous session as markets assessed potential de-escalation in the Middle East and strong economic data from China. In the latest development, US President Donald Trump said the pause on attacks targeting Iran’s energy infrastructure would be extended into April, adding that talks with Tehran were “going very well.” However, an Iranian official rejected a reported US proposal to end the conflict as “one-sided and unfair.” Meanwhile, China’s industrial profits surged 15.2% year-on-year to CNY 1.02 trillion in the first two months of 2026, a sharp rebound from 0.6% growth in 2025. The figures point to growing momentum in China’s recovery, even as geopolitical tensions continue to cloud the global outlook. On the diplomatic front, US President Donald Trump’s first visit to China in eight years has been rescheduled for May?14–15 after being delayed due to the Iran war.