China 10Y Yield Remains Steady

China’s 10-year government bond yield steadied around 1.81% on Friday, extending a subdued prior session, as investors weighed the People’s Bank of China’s cautious easing stance against mixed inflation data. Consumer prices rose 1% year-on-year in March 2026, easing more than expected as Lunar New Year-driven demand faded. Meanwhile, producer prices rebounded 0.5%, marking its first increase since September 2022, partly due to higher energy costs amid Middle East tensions and disruptions in the Strait of Hormuz. While China’s strategic reserves and diversified energy imports have helped cushion external shocks, signs of domestic cost pass-through are emerging, reflected in the third retail fuel price hike since late February. Nevertheless, the central bank maintained a cautious stance at its latest quarterly meeting, signaling limited appetite for aggressive monetary easing following a modest rate cut in 2025.
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