China’s 10-Year Yield Falls on Trade Woes

China’s 10-year government bond yield fell to around 1.70% on Friday, as investors moved towards safer assets amid growing concerns following US President Donald Trump’s announcement of new tariffs. Trump unveiled a 10% baseline global tariff and imposed retaliatory duties reaching up to 41% on countries lacking trade deals. Additionally, he announced a 40% tariff targeting goods suspected of being rerouted through third countries to avoid existing levies. Meanwhile, the US and China wrapped up a third round of trade negotiations this week. Treasury Secretary Scott Bessent stated that the talks have “the makings of a trade deal,” with both countries facing an August 12 deadline to extend the current pause on tariffs. In China, both private and official data revealed a contraction in manufacturing activity for July, with official figures showing the sharpest decline in six months. These data suggest weakening demand and a slowdown in economic momentum as the third quarter begins.