China bond yields jump to three-month highs as investors pare rate cut expectations

China’s sovereign bond prices fell, leading to higher yields, as investors reduced holdings in anticipation of increased fiscal spending to boost growth and delay interest rate cuts. Yields on 10-year government bonds rose over 10 basis points to 1.865%, hitting their highest levels this year, while 30-year bond yields surpassed 2% and one-year note yields reached 1.643%. This shift follows the Chinese government’s plans for fiscal easing, including a record-high fiscal budget deficit and a substantial increase in ultra-long-term bond issuance, signaling a more pro-growth stance.

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