FX.co ★ China 10-Year Yield Up on US-China Trade Progress

On Monday, China's 10-year government bond yield climbed to approximately 1.65%, following a relatively quiet session on Friday. This increase comes as optimism surrounding advancements in US-China trade negotiations eclipsed the country's growing deflationary challenges. The conclusion of two days of intense discussions between the United States and China took place on Sunday in Geneva, with both parties announcing "substantial progress" in their talks. US Treasury Secretary Scott Bessent characterized the talks as productive, while China's Vice Premier He Lifeng mentioned an "important consensus" being achieved. Anticipation builds for a joint statement expected later today, as markets are keenly observing for specific actions that might stimulate China's export sector. However, the inflation data for April highlights ongoing economic frailty, with consumer prices decreasing by 0.1% year-on-year for three consecutive months, and producer prices dropping by 2.7%, marking the steepest decline in six months. This data points to weakened domestic demand and increasing external risks, particularly stemming from strained trade relations and a sluggish labor market.