China 10Y Yield Hits Over 1-Year Low

China’s 10-year government bond yield dropped to around 1.69% on Thursday, hitting its lowest level since mid-July 2025, as investors welcomed fresh signals of policy support from the People's Bank of China. The central bank pledged to roll out additional measures in a timely manner, saying it would make full use of existing policy tools, introduce "practical and effective" new measures when needed, and strengthen countercyclical adjustments. The PBOC also vowed to step up support for domestic demand, technological innovation, and small and medium-sized enterprises. However, the absence of details on any major easing measures reinforced expectations that broad-based monetary stimulus remains unlikely in the near term. Separately, the PBOC conducted no seven-day reverse repos for a third consecutive session on Thursday, while announcing plans to inject up to CNY 600 billion per day through overnight reverse repos on August 14 and August 17–19.

China’s 10-year government bond yield traded around 1.70% on Wednesday, hovering near its lowest level since August 2025, as softer inflation data reinforced expectations that Beijing has greater flexibility to provide additional policy support in the remainder of the year. Annual consumer inflation eased to a six-month low of 0.5% in July, reflecting further declines in food prices and slower growth in non-food costs. Producer prices also slowed to 3.5% from 4.1%, marking their first deceleration since turning positive in March following the oil-price surge linked to tensions in the Middle East. Meanwhile, the Political Bureau of the Communist Party of China Central Committee pledged more proactive macroeconomic policies, faster fiscal spending, and continued support for equipment upgrades and consumer goods trade-ins. On the monetary policy front, the PBoC conducted no seven-day reverse repos on Tuesday, its first pause in short-term liquidity injections since June.

China’s 10-year government bond yield held around 1.70% on Friday, hovering near its lowest level in nearly a year as strong trade data underscored the resilience of the country’s external sector. While both export and import growth eased in July, they remained robust amid strong demand for AI-related technology products. Exports rose 23.9% year-on-year to USD 397.85 billion, surpassing market expectations, while imports climbed 27.5% to USD 285.35 billion, broadly in line with forecasts. As a result, China’s trade surplus widened to USD 112.5 billion from USD 97.7 billion a year earlier, above market expectations. Beijing recently unveiled fresh retaliatory measures against Washington, including tighter controls on drone and related technology exports, sanctions on seven US firms, and its first national security investigation tied to foreign trade. The move highlights persistent trade tensions ahead of a planned September meeting between Presidents Xi Jinping and Donald Trump.