FX.co ★ China 10-Year Yield Nears 7-Week High

China's 10-year government bond yield is nearing 1.83%, its highest in seven weeks. This upward trend reflects investors' shifting preferences away from bonds due to the People's Bank of China's apparent reluctance to introduce further monetary stimulus. Concurrently, Beijing is emphasizing fiscal support measures, which are influencing the bond market dynamics. The limited scope for monetary easing tempers expectations for lower yields, while increased fiscal stimulus suggests higher government bond issuance, diminishing bonds' attractiveness. Investor apprehension has also intensified as China's stock and bond markets deviate from their traditional inverse correlation, where typically declining equities would bolster bond prices. Notably, the recent decline in Chinese equities, driven by a selloff in US artificial intelligence stocks, has not enticed investors back into the bond market. Market participants are now closely monitoring this coming weekend's release of China’s Purchasing Managers' Index (PMI) for further insights into the nation's economic condition.