{"id":439665,"date":"2026-10-08T08:51:07","date_gmt":"2026-10-08T01:51:07","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/china-bucks-global-bond-rout-as-10-year-yield-touches-1-7-439665\/"},"modified":"2026-10-08T08:51:07","modified_gmt":"2026-10-08T01:51:07","slug":"china-bucks-global-bond-rout-as-10-year-yield-touches-1-7","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/china-bucks-global-bond-rout-as-10-year-yield-touches-1-7-439665\/","title":{"rendered":"China bucks global bond rout as 10-year yield touches 1.7%"},"content":{"rendered":"<div>\n<p dir=\"ltr\">A gap of more than 3.5 percentage points between Chinese and US 10-year yields keeps downward pressure on the yuan and makes the currency attractive to borrow for carry trades, leaving the People&#8217;s Bank of China leaning on capital controls and its daily fixing to contain weakness. Central bank buying signals that Beijing is comfortable with low rates, so a policy-driven reversal in Chinese bonds looks unlikely while the domestic economy remains soft. For global markets, China is exporting disinflation rather than adding to the yield surge, and its banks&#8217; appetite for government debt shows how little demand there is for credit. Any sign that savings are rotating from bonds into equities would be an important shift for mainland stocks.<\/p>\n<p dir=\"ltr\">&#8212;<\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/stock-market-update\/china-markets-reopen-after-golden-week-five-things-to-watch-for-stocks-and-gold\" target=\"_blank\" rel=\"follow\">China markets reopen after Golden Week: five things to watch for stocks and gold<\/a><\/li>\n<\/ul>\n<p dir=\"ltr\">\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\"> While the rest of the world frets over soaring borrowing costs, China has the opposite problem: too much savings chasing too few places to put it.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li>China&#8217;s benchmark 10-year government bond yield has fallen to as low as 1.7%, more than 3 percentage points below the 5.3% yield on the equivalent US Treasury<\/li>\n<li>Chinese yields are also below those in the UK, France and even Japan<\/li>\n<li>Global yields are being pushed up by heavy government borrowing, war-driven energy inflation and AI-related demand for capital<\/li>\n<li>China&#8217;s economy is held back by weak consumption and a multiyear property slump, while exports are strong<\/li>\n<li>The People&#8217;s Bank of China has been a net buyer of bonds this year, a reversal from 2024, when Beijing planned bond sales to push yields higher<\/li>\n<li>Chinese banks held about 29 trillion yuan ($4.4 trillion) of bonds as of August, more than double their 2022 holdings<\/li>\n<\/ul>\n<p dir=\"ltr\">\n<p dir=\"ltr\">China&#8217;s government bond market is moving in the opposite direction to the rest of the world, with yields falling this year even as a global sell-off pushes borrowing costs to multi-decade highs elsewhere, the <a href=\"https:\/\/www.wsj.com\/finance\/investing\/bond-yields-are-surging-around-the-worldbut-not-in-china-efd4c694\" rel=\"follow\">Wall Street Journal (gated)<\/a> reported.<\/p>\n<p dir=\"ltr\">The yield on China&#8217;s benchmark 10-year government bond has fallen to as low as 1.7%, more than 3 percentage points below the 5.3% yield on the equivalent US Treasury note. Chinese yields also sit well below those in the UK and France, and even below Japan&#8217;s, long the standard example of ultralow rates. Economists at ING said China is going against the entire global trend.<\/p>\n<p dir=\"ltr\">Elsewhere, yields have been driven higher by surging government debt and the inflationary impact of the Iran war, which has lifted energy prices. Artificial intelligence is also playing a role, both by raising expectations for future growth and by drawing capital away from government bonds and towards AI developers and data centre builders.<\/p>\n<p dir=\"ltr\">China faces a different set of conditions. Exports are booming, but consumption is weak and the property market remains mired in a multiyear slump. Inflation has picked up but is less of a concern than in the US and other major economies.<\/p>\n<p dir=\"ltr\">Low yields carry their own risks. They reduce income for savers, who may then save more and spend less. They also send a downbeat signal about growth that can discourage hiring and investment, and they can push investors into riskier assets in search of returns.<\/p>\n<p dir=\"ltr\">Beijing&#8217;s stance has shifted markedly. As recently as 2024, policymakers were concerned enough about falling yields that they planned to sell government bonds to push them higher. This year, the People&#8217;s Bank of China has instead been a net buyer, suggesting it now views lower borrowing costs as helpful for weaker parts of the economy. One China economist said this showed officials were comfortable with lower yields.<\/p>\n<p dir=\"ltr\">Underlying the trend is a lack of alternatives for China&#8217;s large pool of savings. Capital controls keep household money at home, property is no longer a reliable store of wealth, and stock market returns have been poor over time. That leaves wealth management products heavily invested in bonds as a default option. Banks are even bigger buyers, building bond holdings to about 29 trillion yuan ($4.4 trillion) as of August, more than double their 2022 level, as loan demand stays weak. How quickly domestic demand recovers will determine whether that savings glut keeps pinning Chinese yields down.<\/p>\n<p dir=\"ltr\">\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>A gap of more than 3.5 percentage points between Chinese and US 10-year yields keeps downward pressure on the yuan and makes the currency attractive to borrow for carry trades, leaving the&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-439665","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439665","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=439665"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439665\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=439665"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=439665"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=439665"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}