FX.co ★ China 10Y Yield Hits Over 1-Month Low

China’s 10-year government bond yield fell to around 1.80% on Monday, its lowest level in more than a month, as investors moved into safe-haven assets following the collapse of US–Iran peace talks. The negotiations ended without a breakthrough, and President Trump’s announcement of a full naval blockade of the Strait of Hormuz further stoked fears of global energy supply disruptions.

In the context of a worsening conflict in the Middle East, Chinese assets—particularly government bonds—have stood out as a relative safe haven, underpinned by the country’s energy resilience, supportive policy stance, and relatively limited direct exposure to geopolitical flashpoints. Market sentiment has also been bolstered by signs of improving domestic economic momentum, highlighted by China’s recent exit from producer price deflation, which had persisted since September 2022.

Despite the global bond selloff, China’s 10-year yield has risen by only about 3 basis points through Friday, compared with increases of at least 40 basis points in comparable US and European benchmarks. Looking ahead, investors are turning their attention to a busy slate of Chinese economic releases, including trade data, first-quarter GDP, industrial production, retail sales, and the unemployment rate.