FX.co ★ China 10Y Yield Stays Near 3-Week Low

On Monday, the yield on China’s 10-year government bond increased to approximately 1.78%, although it remained near the three-week low reached previously, as investors processed lackluster export data. The August figures revealed a mere 4.4% increase in Chinese exports year-on-year, falling short of the anticipated 5% rise and marking the slowest growth in six months. Exports to the United States saw a sharp decline of 33%, as the momentum from prior frontloading activities waned amid ongoing tariffs. This occurred even after a 90-day extension of the tariff truce, keeping US tariffs at 55% on Chinese goods and Chinese tariffs at 30% on US imports, with bilateral negotiations continuing to face significant hurdles toward achieving substantial progress. Given the sluggish data, there are persistent calls for additional fiscal stimulus in the fourth quarter. Meanwhile, investors are focusing on crucial upcoming data, particularly August’s consumer prices, which are likely to revive deflationary worries. In a broader context, China is reopening its bond market to Russian energy companies, indicating strengthening economic ties with Moscow.