FX.co ★ China 10-Year Yield Ends 3-Day Win Streak

On Tuesday, the yield on China's 10-year government bond slightly declined to approximately 1.66%, following three consecutive days of increases. This adjustment came as investors processed a series of mixed economic reports. While the GDP expanded by 5.2% in the second quarter, slightly surpassing expectations, it still represented a deceleration from the 5.4% growth seen in the previous quarter. Industrial output exceeded forecasts, providing some market support, yet the weakness in retail sales and underwhelming investment numbers highlighted the inconsistency in domestic demand. Additionally, new yuan loans saw a significant surge in June, surpassing expectations and suggesting robust credit demand. This increase in lending, coupled with a rise in bond issuance to finance government stimulus efforts, could exert upward pressure on yields. However, the fragile US–China trade détente—particularly the lack of advancement on critical topics like military-use rare earths, as highlighted in reports—underscores ongoing uncertainties in the bilateral relationship. In other developments, former President Trump expressed readiness to enter further tariff discussions with the European Union and other strategic partners.