China 10Y Yield Stays at 6-Week Low
China’s 10-year government bond yield held below 1.78%, near a six-week low as hopes for a potential Middle East peace deal eased global inflation concerns, while investors remained cautiously optimistic despite China’s stronger economic momentum at the start of the year. The economy grew 0.5% in the first quarter from a year ago, accelerating from the 4.5% gain in the prior quarter and beating forecasts. However, underlying momentum appeared uneven, with industrial output and retail sales slowing, while the jobless rate hit a thirteen-month high. Meanwhile, the US and Iran are considering extending their two-week ceasefire to allow more time for negotiations, even as the Strait of Hormuz remains effectively closed under a dual blockade. Looking ahead, China is set to issue CNY 15.5 billion of government bonds in Hong Kong on April 22, the largest Dim Sum bond tranche since October 2023, a move expected to support offshore yuan liquidity and put downward pressure on yields.

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