China's long-dated government bond yields have kept falling, bucking a global bond selloff that has pushed yields elsewhere to multi-year highs. The 30-year yield dropped to its lowest since November last year, narrowing the spread between 10-year and 30-year bonds to 50 basis points, near the tightest since February this year. Open interest in 30-year bond futures hit a record high on Friday, reflecting heavy speculation that Chinese yields will fall further. Analysts at Zhongtai Securities view the narrower 10-30 year spread as offering the best risk-reward balance for the rest of this year and expect the 30-year yield to fall to 2%. Weak Chinese economic data for July, with industrial output, retail sales and investment all missing expectations, has reinforced bets that Beijing will ease policy further. Investors have piled into longer-dated bonds, reflecting a view that China's economy may face a prolonged slowdown, in contrast with many countries where interest rates remain high. The 10-year US Treasury yield hit its highest since 2025 this week, while long-dated bonds globally have come under selling pressure. Analysts at Shanze Fund explained that the recent bond rally has been driven mainly by short-term trading books rather than long-term investment portfolios. If the market expects further monetary easing in China and liquidity remains loose, the spread between 10-year and 30-year yields could narrow toward 40 basis points. Chinese government bonds have returned 2.6% since the start of the year excluding currency effects, putting China third among major bond markets. The 30-year yield held at 2.15% on Wednesday, near the nine-month low reached the previous day. Demand for bonds remains strong, with a 20-year special government bond auction today drawing a record bid-to-cover ratio.
Weak economic data and easing bets push yields down, but the article focuses on yield decline; for a yield instrument, falling yield is negative.
30-year yield falls to 2.15%, near nine-month low, on easing bets and weak data; for a yield instrument, falling yield is negative.
