The yield on China’s 10-year government bond rose to a 10-week high of 2.856% as the government’s diverging monetary policy from the Fed coupled with weak domestic economic situation reduced investor’s appeal for riskier Chinese assets. A fresh outbreak in Covid cases in the eastern provinces raised fears of a slowdown in economic recovery while real estate giant Shimao Group's default on US$1 billion offshore bond after a year of mounting financial stress, deepened the domestic property market crisis. Meanwhile, the country took fresh steps to promote foreign investment in its $20 trillion bond market after overseas investors reduced holdings of Chinese bonds for a fourth consecutive month in May. The China Foreign Exchange Trade System, affiliated to China's central bank announced to cut service fees and improve overseas access to foreign exchange hedging while also pledging to streamline the process of opening accounts and facilitate cross-border bond subscriptions.
Historically, the China Government Bond 10Y reached an all time high of 4.80 in September of 2007. China Government Bond 10Y - data, forecasts, historical chart - was last updated on July of 2022.
The China Government Bond 10Y is expected to trade at 2.85 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 2.93 in 12 months time.