China 10Y Yield Eases from 5-Week High

China’s 10-year government bond yield fell to around 1.81% on Monday, easing from a five-week high, as investors sought safe-haven assets amid escalating conflict in the Middle East. The US and Israel carried out coordinated strikes on Iran over the weekend, killing Iran’s Supreme Leader, Ayatollah Ali Khamenei. Iran retaliated against US assets in neighboring countries, rattling global markets and effectively closing the Strait of Hormuz. As the world’s largest crude importer, China faces inflationary and growth pressures from surging oil prices. Beijing urged an immediate ceasefire and advised citizens in the region to evacuate. Markets are also focused on China’s annual Two Sessions from March 4–11, where policymakers will set economic targets and release the 15th Five-Year Plan for 2026–2030. Meanwhile, the PBOC officially cut the FX risk reserve ratio on forward sales from 20% to 0%, effective today, signaling efforts to increase liquidity and stabilize capital flows.

China’s 10-year government bond yield fell to around 1.81% on Friday, retreating from a one-month high reached in the previous session as investors returned from a week-long holiday with caution amid trade policy concerns, while the People's Bank of China kept rates unchanged for the ninth straight month. The PBoC held its one-year and five-year loan prime rates at 3% and 3.5%, respectively, indicating that authorities are in no rush to implement broad monetary easing after recent sector-targeted cuts. The decision also reflects a careful balance between supporting growth and maintaining financial stability. Meanwhile, US President Donald Trump announced plans to raise a temporary 10% tariff on imports to 15% in response to a ruling by the Supreme Court. He further warned that countries backing away from recent trade deals could face even higher duties. Still, sentiment was aided by expectations that Trump’s new tax policies could boost Chinese exports.

China’s 10-year government bond yield rose toward 1.80% on Friday, rebounding from a three-month low as investors took a cautious approach ahead of the Lunar New Year holiday. Mainland China markets will be closed Feb. 16–23, 2026, for the country’s biggest festival. Earlier this week, several developments shaped market sentiment. Financial institutions were advised to limit US Treasury holdings and reduce high-exposure positions amid concentration risk and market volatility. Meanwhile, the central bank reaffirmed its “moderately loose” monetary policy, signaling caution amid evolving domestic and global conditions. In the bond market, China raised CNY 14 billion in its first sovereign bond auction in Hong Kong this year, with yields hitting its lowest levels in over a decade. On the geopolitical front, the US has reportedly paused several tech-security measures targeting China ahead of a planned April summit between Presidents Donald Trump and Xi Jinping, easing some market pressure.