China 10-Year Yield Hits Near 3-Week Low

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.

China’s 10-year government bond yield edged down to around 1.82%, trading in a narrow range as investors weighed conflicting developments on Middle East tensions. US President Donald Trump delayed planned strikes on Iranian energy infrastructure after what he described as productive talks between the two countries. However, Iran's foreign ministry denied the talks shortly thereafter, adding that the country's conditions to end the war had not changed. Tehran also said it had launched new attacks on US targets, while Israel continued its strikes on Iran, keeping geopolitical risks elevated and clouding the outlook for energy prices. Meanwhile, China stands to gain from the conflict due to its lower energy dependence and its edge in renewables. China's Premier Li also vowed to boost imports of high-quality foreign goods and promote balanced trade, while PBoC Governor Pan sought to calm concerns over China’s trade surplus.