China 10Y Yield Remains Subdued

China’s 10-year government bond yield held its recent decline to around 1.81%, remaining well below a two-month high reached on March 9, as markets continued to assess developments in the Middle East war. In a notable development, US President Trump announced a two-week ceasefire agreement with Iran, following his earlier threats of military action in the region. As part of the deal, Iran agreed to temporarily reopen the Strait of Hormuz, a critical global oil shipping route. However, sentiment turned cautious amid reports suggesting the 10-point framework lacks full commitment from both sides, leaving the deal fragile and incomplete. Meanwhile, China remains relatively better positioned among Asian peers, supported by the country's large oil stockpiles and comparatively stable energy supply chains. Investors are now turning their attention to upcoming inflation data later this week for further insight into China’s economic health and the potential impact on monetary policy.

China’s 10-year government bond yield fell to around 1.81% on Wednesday, marking its fourth consecutive session of losses as investors closely monitor the unfolding situation in the Middle East. In a notable development, US President Trump announced a two-week ceasefire agreement with Iran, following his earlier threats of militarya ction in the region. As part of the deal, Iran agreed to temporarily reopen the Strait of Hormuz, a critical global oil shipping route. The ceasefire announcement, made just before Trump’s 8 p.m. ET deadline, offers a glimmer of hope for de-escalation in the volatile region. Domestically, RatingDog showed that China’s composite PMI fell to 51.5 in March from 55.4 in the prior month, as both the manufacturing (50.8 vs 52.1) and services (52.1 vs 56.7) sectors lost momentum. Investors are now turning their attention to upcoming inflation data later this week for further insight into China’s economic health and the potential impact on monetary policy.

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.