China’s 10-year government bond yield slipped to around 1.83%, trading within a narrow band as investors weighed mixed signals surrounding tensions in the Middle East. US President Donald Trump postponed planned strikes on Iranian energy infrastructure, citing what he called productive talks between the two countries. Shortly afterward, however, Iran’s foreign ministry denied that such talks had taken place and reiterated that its conditions for ending the war remained unchanged. Tehran also claimed to have launched fresh attacks on US targets, while Israel continued its strikes on Iran, keeping geopolitical risks elevated and adding uncertainty to the outlook for energy prices.
At the same time, China may stand to benefit from the conflict, given its relatively lower dependence on energy imports and its competitive position in renewables. Premier Li pledged to expand imports of high-quality foreign goods and to promote more balanced trade, while PBoC Governor Pan moved to ease concerns about China’s persistent trade surplus.
