China’s 10-year government bond yield fell to 1.75% on Friday, erasing the previous session’s gains and reaching its lowest level in more than two weeks, as markets were buoyed by cautious optimism ahead of the high-stakes Trump–Xi summit. President Xi warned that Taiwan could become a flashpoint for potential “clashes” between the world’s two largest powers, calling the situation “highly dangerous.” He also reiterated Beijing’s opposition to US arms sales to Taiwan and to any moves toward Taiwanese independence.
Despite the firm rhetoric, the White House noted that both sides discussed increasing Chinese purchases of US agricultural products and oil, and agreed that the Strait of Hormuz must remain open. Crucially, US Trade Representative Jamieson Greer indicated that both countries appeared willing to extend the current trade truce, provided negotiations continue to make progress. As the meeting moved into its second day, traders maintained a cautiously optimistic stance on the prospects for further breakthroughs.
