China 10-Year Yield Hits Lowest Since 2020 as Easing Bets Mount

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Pedestrians stand at a crosswalk on Nov. 16 in Guangzhou, South China’s Guangdong province. Photo: Bloomberg

(Bloomberg) — China’s bond market rally has continued into 2024 as bets on the potential for interest rate cuts gathered pace following weak economic data at the end of last year.

The yield on 10-year sovereign notes dropped to 2.54% on Thursday, the lowest since April 2020, extending a decline that kicked off in November. A combination of liquidity support from the People’s Bank of China (PBOC) and major lenders slashing deposit rates for a third time in 2023 fueled expectations that Beijing will loosen monetary policy further to aid growth.