China 10Y Yield Nears 8-Week Low

China’s 10-year government bond yield traded below 1.8% on Tuesday, nearing its lowest level in eight weeks, after Chinese regulators urged banks to curb excessive exposure to US Treasuries. Financial institutions were advised to rein in Treasury holdings and trim positions where exposure is high, citing concentration risk and market volatility. Still, the move was framed as market risk diversification rather than a geopolitical signal or a loss of confidence in US credit. The shift reinforces broader diversification away from dollar-denominated assets and could accelerate capital repatriation into Chinese markets, putting yields under pressure. Meanwhile, the People’s Bank of China has been ramping up liquidity injections ahead of the Lunar New Year to cover a large temporary funding shortfall amid cash withdrawals linked to holiday spending. By supplying banks with extra cash, demand for government bonds rises, weighing further on yields.

China 10 Year Government Bond Yield decreased to 1.80%, the lowest since December 2025. Over the past 4 weeks, China 10Y Bond Yield lost 6.30 basis points, and in the last 12 months, it increased 18.80 basis points.

China’s 10-year government bond yield fell to around 1.8% on Monday, hitting its lowest level in two weeks, as the central bank boosted liquidity to ease seasonal funding pressures ahead of the Lunar New Year. The People’s Bank of China injected 600 billion yuan via 14-day repurchase agreements last week to help banks cover a temporary funding gap of roughly 3.2 trillion yuan, and is expected to add up to 3.5 trillion yuan more before the holidays. By providing banks with extra cash, the move increased demand for government bonds, putting downward pressure on yields. The injections come amid cash withdrawals linked to holiday spending, heavy government bond issuance and strong demand for yuan from companies, all of which tighten liquidity. Looking ahead, China is expected to cut the reserve-requirement ratio by 50 basis points and lower interest rates this year. Investors will watch this week’s inflation data for clues on PBOC policy support.