China 10-Year Yield Falls to Near 1-Month Low

China’s 10-year government bond yield fell to around 1.80% on Tuesday, hitting its lowest level in nearly a month, as unexpectedly strong PMI data highlighted the resilience of the world’s second-largest economy amid ongoing Middle East tensions. Official figures showed the composite PMI rising to a three-month high of 50.5 in March 2026, signaling renewed growth across both sub-sectors. The manufacturing PMI climbed to a one-year high of 50.4, while the non-manufacturing PMI increased to 50.1, supported by government stimulus measures, robust holiday spending, and strong exports despite persistent global supply chain disruptions and volatility in the energy markets. However, although Chinese policymakers have frequently underscored the importance of boosting domestic consumption while curbing 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.