China 10Y Yield Remains Steady

China’s 10-year government bond yield steadied around 1.81% on Friday, extending a subdued prior session, as investors weighed the People’s Bank of China’s cautious easing stance against mixed inflation data. Consumer prices rose 1% year-on-year in March 2026, easing more than expected as Lunar New Year-driven demand faded. Meanwhile, producer prices rebounded 0.5%, marking its first increase since September 2022, partly due to higher energy costs amid Middle East tensions and disruptions in the Strait of Hormuz. While China’s strategic reserves and diversified energy imports have helped cushion external shocks, signs of domestic cost pass-through are emerging, reflected in the third retail fuel price hike since late February. Nevertheless, the central bank maintained a cautious stance at its latest quarterly meeting, signaling limited appetite for aggressive monetary easing following a modest rate cut in 2025.

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.