China 10Y Yield Eases as Trade Talks Continue

China’s 10-year government bond yield inched lower to around 1.73% on Tuesday, pulling back gains from the previous session, as investors cautiously monitored ongoing US-China trade talks. The negotiations entered their second day, with both sides aiming to extend a fragile trade truce by another 90 days ahead of the August 12 deadline. A positive outcome could set the stage for a meeting between Presidents Trump and Xi Jinping later this year and help ease tensions in key sectors such as semiconductors and rare earths. Domestically, fiscal attention remains on the rollout of special bonds, with 231 billion yuan already allocated to support the consumer goods trade-in program and the remaining issuance expected in October, slightly weighing on yields amid concerns over increased supply. Investors now await the release of July PMI figures in the coming days, along with a private sector survey.