FX.co ★ China 10Y Yield Muted as Policy Holds

On Monday, the yield on China's 10-year government bonds remained stable at 1.68%, as investors evaluated the latest policy decisions from the People's Bank of China. The central bank maintained its benchmark lending rates, as anticipated, leaving the 1-year loan prime rate at 3.0% and the 5-year rate at 3.5%. This decision comes amid persistent weak consumer sentiment and inconsistent economic growth. Additionally, external risks persisted, following the White House's reaffirmation of its tariff policies over the weekend and establishment of August 1 as the definitive deadline for countries to comply. Meanwhile, China's bond exchange-traded funds (ETFs) have surpassed $50 billion in assets, indicating robust investor interest as deflationary pressures continue to depress yields. Looking forward, the upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea this October may provide new insights into China's policy direction, as President Xi Jinping considers meeting with US President Donald Trump to discuss trade issues and explore cooperation opportunities.