China 10Y Yield Extends 3-Session Decline

China's 10-year government bond yield fell to around 1.72% on Thursday, extending losses for a third consecutive session and hitting a more than one-week low, as the growing role of bond financing could support the People's Bank of China's efforts to lower borrowing costs. The shift toward bond issuance reflects China's ongoing transition to a high-tech, innovation-driven economy, where capital market funding often offers cheaper financing than traditional bank loans. Government and corporate debt accounted for a record 30% of China's outstanding credit stock in May. Meanwhile, the People's Bank of China has been supporting liquidity conditions in the 200 trillion yuan bond market through policy operations, helping to keep yields low and ease funding costs across the economy. Separately, investors are closely watching the final session of the Lujiazui Forum for further policy signals and potential support measures.

China's 10-year government bond yield fell to 1.73% on Wednesday, hitting a fresh one-week low as investors assessed signals that the People's Bank of China could adjust its monetary policy framework. Speaking at the Lujiazui Forum, PBOC Governor Pan Gongsheng said the central bank would optimize its management of short-term interest rates and expand its overnight reverse repo operations at an appropriate time. The remarks reinforced expectations that the PBOC may gradually transition away from relying on the seven-day reverse repo rate as its main policy anchor, aligning its operating framework more closely with those of major global central banks while enhancing its control over short-term funding conditions.  Separately, at the same forum, Chinese Vice Premier He Lifeng said Beijing plans to incorporate anti-sanctions provisions into its financial legislation, aiming to strengthen the country's ability to counter what he described as "unreasonable" external restrictions.

China's 10-year government bond yield traded around 1.74% on Tuesday, hitting its lowest level in a week as a mixed set of economic data highlighted persistent headwinds facing the world's second-largest economy, prompting investors to shift toward the relative safety of government bonds. New home prices across 70 cities extended their decline for a 35th straight month, remaining the steepest contraction since May 2025, and the fixed-asset investment dropped more than market expectations. Additional pressure came from consumer spending data, as retail sales unexpectedly contracted in May, marking the first year-on-year decline since December 2022. Meanwhile, industrial production expanded at a faster-than-anticipated pace in May, accelerating from April's near three-year low. Labor market conditions also showed signs of improvement, with the surveyed urban unemployment rate easing to a five-month low.