China 10Y Yield Extends Fall to One-Week Low

China’s 10-year government bond yield fell to around 1.81% on Thursday, extending losses from the previous session and hitting a one-week low, as investors recalibrated their expectations for the People’s Bank of China’s next policy move. Beijing's rate markets signaled lower chances of additional policy loosening, as early 2026 data point to a stronger-than-expected economic start, coupled with a modest rebound in consumer prices and slowing factory-gate deflation. Moreover, a sharp spike in global oil prices, fueled by escalating tensions in the Middle East, could constrain the central bank’s ability to ease policy aggressively. Investors are now recalibrating their outlook, with markets increasingly pricing in a steady or slightly firmer policy stance. Investors are now focused on Friday’s benchmark loan prime rate update, with the one-year and five-year rates widely expected to remain steady at 3.0% and 3.5%, respectively.

China’s 10-year government bond yield hovered around 1.82%, moving in a tight range as markets continued to monitor geopolitical and trade developments. Oil prices remained volatile as Iran intensified attacks on energy infrastructure in the Persian Gulf, though optimism over a potential reopening of the Strait of Hormuz supported sentiment. US Treasury Secretary Scott Bessent said Washington is allowing Iran to continue shipping crude through the route, while President Donald Trump seeks broader international support to secure commercial traffic. On the trade front, Trump asked Xi Jinping to delay their summit by about a month to focus on the Iran conflict. Bessent also said any postponement would be due to scheduling considerations rather than pressure on China over the vital shipping route. Meanwhile, China’s solid activity data for January–February showed resilience despite the deepening geopolitical tensions, with industrial output, retail sales, and fixed investment all rising.

China’s 10-year government bond yield hovered around 1.828% on Monday, trading in a sideways range as investors weighed fresh geopolitical and trade developments, while China’s key economic data came in strong at the start of the year. Figures showed industrial output, retail sales, and fixed-asset investment all surpassed expectations, pointing to firmer momentum early in the year. However, challenges persisted as the property sector remained under pressure and unemployment ticked higher. Officials also cautioned that rising geopolitical tensions could cloud the outlook, particularly as the expanding Middle East conflict threatens global growth and trade. In the latest update, President Trump ordered strikes on Iranian military assets on Kharg Island and warned of further attacks on crude facilities. He also signaled a potential delay to his Beijing summit unless China helps reopen the Strait of Hormuz. Still, numbers suggest that China may be less exposed to the Hormuz disruption.