FX.co ★ China 10Y Yield Rises on Tariff Truce Extension

On Tuesday, the yield on China's 10-year government bond climbed to approximately 1.73%, driven by an investor pivot towards riskier assets. This shift came in response to the announcement that the United States and China had mutually decided to extend their tariff ceasefire by an additional 90 days. The extension, authorized by President Trump on Monday, postpones significant tariff increases until mid-November. Previously, US tariffs on Chinese goods were set to surge from the current 30% to a staggering 145%, while Chinese tariffs on US goods would have risen from 10% to 125%. Such hikes would have nearly equated to a trade embargo. This postponement provides respite to exporters and retailers during the crucial holiday season and maintains lower tariffs on essential imports. Market sentiment was further buoyed by news that Nvidia and AMD agreed to relinquish 15% of their China chip revenue to the US government in return for reestablished market access. Meanwhile, market participants await US inflation data expected later in the day, as lower-than-anticipated figures could strengthen the outlook for a more accommodative Federal Reserve policy approach.