China 10-Year Yield Falls Ahead of US-China Trade Talks

China’s 10-year government bond yield fell to around 1.72% on Monday, extending its decline from the previous session amid growing optimism over US-China trade negotiations. The high-level meeting, scheduled for later today in Stockholm, will feature US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. Bessent expressed hope that the talks could lead to a prolonged truce, with the agenda expected to go beyond tariffs and include topics such as China’s energy imports from Russia and Iran. Meanwhile, reports suggest both sides are likely to extend the tariff truce by three months, with one source noting that no new tariffs are planned during that period. At home, China’s fiscal revenue saw a slight decline in the first half of 2025, even as government spending continued to rise. Additionally, industrial profits deteriorated further compared to the previous month, weighed down by persistent deflationary pressures and ongoing US-China trade tensions.