FX.co ★ China 10-Year Yield Hits 8-Week Low

On Tuesday, the yield on China's 10-year government bond fell below 1.75%, marking its lowest point since early September. This decline follows the announcement from the People’s Bank of China that it plans to resume trading in sovereign bonds after a suspension lasting several months. The central bank had paused these operations in January due to heightened demand for secure assets, which had previously driven yields to unprecedented lows. As market conditions have now begun to stabilize, the bank is reinitiating open-market trading to enhance liquidity and ensure the smooth operation of the debt market. Analysts anticipate that this measure will contribute to smoothing the yield curve and balancing supply-demand dynamics, aligning with Beijing’s broader initiative to maintain stable funding conditions while also managing financial risks. Additionally, the yield decline was moderated by growing optimism for a possible US–China trade agreement, as officials finalized a framework ahead of the anticipated meeting between Presidents Trump and Xi in South Korea. Investors are also keeping an eye on forthcoming economic indicators, with official Purchasing Managers' Index (PMI) data expected this week, followed by private surveys next week.