China 10Y Yield Remains Subdued

EthereumCraftsman · 2026-02-02T04:00:18+00:00

China's 10-year government bond yield remains low at 1.8% amid mixed PMI data showing factory growth but overall contraction. High demand for bonds persists as banks increase purchases due to liquidity and regulatory changes, shifting focus from equities.

EthereumCraftsman

2026-02-02 04:00:18

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China’s 10-year government bond yield held its recent losses around 1.8% on Monday, trading near six-week lows, as investors weighed China’s latest PMI readings. A private survey pointed to faster factory expansion in January, with producers boosting output and front-loading shipments ahead of the extended Lunar New Year holiday, which tempered expectations for near-term policy easing. However, an official survey over the weekend showed an unexpected contraction in both manufacturing and services. Meanwhile, demand for local government bonds remained elevated. Banks have been ramping up purchases, supported by record liquidity injections from the People’s Bank of China and softening loan demand. The shift comes as Beijing seeks to cool the recent equity market rally, prompting investors to turn to the relative safety of government bonds. Regulatory changes have also supported buying, with authorities easing interest-rate risk measures earlier this year to align with global standards.

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