FX.co ★ China 10-Year Heads Toward 1-Month Low

China's 10-year government bond yield declined to approximately 1.80% on Friday, nearing its lowest point in over a month, as interest in Chinese debt has surged. This uptick in demand is fueled by banks increasing their purchases, bolstered by substantial liquidity injections from the People’s Bank of China and a decrease in loan demand. These developments align with Beijing’s strategy to temper the recent surge in the equity markets, prompting investors to seek the relative security of government bonds. In addition, regulatory adjustments have further encouraged this buying trend. Earlier this year, authorities revised interest-rate risk measures to better conform with global standards. Analysts project the 10-year yield to fluctuate between 1.7% and 2.1% by 2026, alongside an anticipated increase in the supply of long-term bonds. As the market anticipates upcoming PMI data, attention is focused on both official and private sector surveys expected shortly.