FX.co ★ China 10-Year Yield Hits Five-Week Low

China's 10-year government bond yield decreased to a five-week low of 1.64% on Monday, as investors sought safer assets due to new liquidity support and ongoing macroeconomic uncertainties. The People's Bank of China injected 400 billion yuan into the banking system through six-month reverse repos, following an unprecedented 1 trillion yuan operation the previous week. This effort was intended to alleviate funding pressures before a significant wave of Negotiable Certificate of Deposit maturities. This action demonstrated continued policy support, consequently driving bond prices higher. Adding to the cautious sentiment were mixed economic signals: retail sales increased at the fastest rate in over a year, while industrial output showed its weakest growth in six months, highlighting the uneven momentum of China's economic recovery. Geopolitical tensions persisted, with renewed attacks between Israel and Iran over the weekend increasing risk aversion and strengthening demand for sovereign debt. Additionally, uncertainty surrounding the broad framework of the US–China trade deal further capped yield increases.