FX.co ★ China 10Y Yield Slips Toward 1-Month Low

China's 10-year government bond yield declined to below 1.83% on Monday, approaching one-month lows as initiatives to strengthen connections with Hong Kong increased the demand for offshore yuan bonds. The central bank has announced plans to boost the offshore issuance of yuan-denominated government bonds, expand swap facilities, and introduce yuan government bond futures in Hong Kong. These developments, alongside enhanced liquidity-management and hedging tools for global investors, are facilitating greater international access to Chinese bonds, thereby helping to stabilize long-term yields despite continuous domestic issuance.

Recently, China has issued new ultra-long special treasury bonds aimed at supporting infrastructure and equipment upgrades, exerting downward pressure on bond prices. Market participants are now closely watching the forthcoming PMI figures, as both official and private surveys scheduled for release this week are expected to provide insights into the nation's economic condition. Meanwhile, attention is also directed towards trade developments, particularly in light of US President Trump's warning that Canada could face tariffs of up to 100% if it concludes a trade agreement with China.