Capital Economics Expects a Gradual Slowdown in China's Government Bond Yields Decline

Foreks - James Reilly from Capital Economics stated that despite the yields on Chinese government bonds, including the 10-year yield, dropping to a record low of approximately 1.60%, the decline could continue further. Senior market economist Reilly indicated that the weak recent economic data from China and the lack of policy measures announced so far to enhance growth expectations have increased expectations for a rate cut by the PBOC, contributing to this situation. Reilly also added that a flight to safety from other Chinese markets is another factor. Capital Economics predicts that most of the decline in the 10-year bond yield is likely to have ended, but expects the bond yield to fall by approximately another 10 basis points by the end of 2025. The yield on China's 10-year bonds currently stands at 1.61%.