China 10Y Yield Rebounds as Growth Outlook Dims

China's 10-year government bond yield rose to around 1.73% on Tuesday, rebounding after two consecutive sessions of declines as investors assessed the latest economic outlook from the World Bank. The lender forecasts China's economic growth to moderate to 4.4% in 2026 and 4.3% in 2027, citing a prolonged property market downturn and subdued consumer demand. It also cautioned that a deeper housing-market correction could further weigh on consumption, real estate investment, and related sectors. Moreover, the government set its 2026 GDP growth target at 4.5%–5.0%, the lowest since 1991 and the first downward revision since 2023, after maintaining a target of around 5% over the previous three years. Meanwhile, US President Donald Trump signaled a September 24 meeting with Chinese President Xi Jinping at the UN General Assembly in New York, following their Beijing summit in May aimed at improving ties.

China's 10-year government bond yield fell to around 1.73% on Monday, continuing its slide from the previous session after investors viewed the People's Bank of China's latest moves as signaling greater caution. The central bank purchased a net 10 billion yuan ($1.47 billion) of government bonds in June, down sharply from 50 billion yuan in the previous month and marking the lowest monthly total since October 2025. The pullback in purchases suggests policymakers are seeking to limit further declines in yields and discourage excessive speculation in the bond market. The move also reflects the PBOC's introduction of a new overnight open-market operation last month. On the economic front, a private survey showed that China's services PMI eased to 54.1 in June from 54.4 in May but remained above market expectations of 53.0. Earlier in the week, official data showed that the non-manufacturing PMI edged up to 50.2 from 50.1, defying expectations for a slight contraction of 49.9.

China's 10-year government bond yield fell to around 1.73% on Thursday, snapping a two-session gains as investors assessed a series of PMI releases. A private survey showed that the Manufacturing PMI ticked down to a three-month low of 51.7 in June from 51.8 in May. The reading followed stronger-than-expected official data showing the Manufacturing PMI rising to 50.3 in June from 50.0 in the previous month, supported by resilient demand for high-tech exports. Meanwhile, the Non-Manufacturing PMI edged up to 50.2 from 50.1, beating expectations of 49.9 and pointing to continued stabilization in the sector. On the monetary policy front, the central bank recently introduced overnight reverse repo operations, injecting CNY 300 billion into the financial system to strengthen short-term liquidity management and enhance money market stability. Meanwhile, the EU's trade chief and China's commerce minister began talks in Brussels aimed at easing trade tensions.