FX.co ★ China 10-Year Yield Falls

On Thursday, the yield on China's 10-year government bonds fell to 1.70%. Investors showed a preference for safer assets due to disappointing Purchase Managers' Index (PMI) data and escalating trade tensions between the US and China. A private survey highlighted that China's composite PMI hit its lowest point in two and a half years, primarily due to weaknesses in the manufacturing sector which overshadowed the sustained strength in the services sector. Additionally, uncertainties around US-China trade relations deepened after President Donald Trump stressed the importance of direct discussions with Chinese President Xi Jinping to prevent further declines in trade and technology relationships. However, President Xi has remained steadfast, requiring significant concessions before entering into talks—a stance that has increasingly frustrated Trump. Furthermore, tensions have been exacerbated by Beijing's unwillingness to ease restrictions on rare earth exports and accusations that Washington is hindering China's access to advanced technologies.