China's Lowest Bond Yields Since 2016 Look Really Juicy to Some
- The yield on 10-year sovereign notes may soon fall below 3%
- Cheap hedging supports rising bonds, but yuan may still weaken
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China’s benchmark government debt is the closest in years to yielding just 3%.
Escalations in global trade tensions since April have put a damper on sentiment, helping spur a rally in Chinese sovereign bonds. The yield on the country’s 10-year debt is down about 40 basis points since a peak that month, falling as low as 3.03% Friday. It hasn’t traded below the 3% threshold since November 2016.