China 10Y Yield Muted as Policy Holds

China’s 10-year government bond yield held steady at 1.68% on Monday, as investors assessed the latest policy decision from the People’s Bank of China. The central bank left benchmark lending rates unchanged, as widely expected, with the 1-year and 5-year loan prime rates held at 3.0% and 3.5%, respectively, amid ongoing weak consumer sentiment and uneven economic growth. Rising external risks also lingered after the White House reaffirmed its tariff stance over the weekend and set August 1 as the hard deadline for countries to begin paying. Meanwhile, China’s bond ETFs have topped $50 billion in assets, signaling strong investor demand as deflationary pressures mount, keeping yields subdued. Looking ahead, the upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea this October may offer fresh cues on China’s policy outlook, as President Xi Jinping is weighing a meeting with US President Donald Trump to address trade disputes and seek cooperation.