China 10-Year Yield Drops After Inflation Data

China’s 10-year government bond yield dropped to around 1.64% on Wednesday, following the release of mixed inflation figures.

Annual consumer prices in June 2025 rose by 0.1%, breaking a three-month streak of 0.1% declines and surpassing market expectations of no growth.

Despite this slight rebound in consumer inflation, the increase was modest, weighed down by ongoing challenges in the property market and renewed tariffs by US President Donald Trump.

On the other hand, producer prices continued to slide, with a 3.6% year-on-year drop—worse than the forecasted 3.2% decline and deeper than May’s 3.3% decrease.

This marked the 33rd consecutive month of producer deflation and the steepest contraction since July 2023.

The sustained fall in producer prices underscores mounting economic strains as China grapples with sluggish domestic demand and growing uncertainty amid escalating global trade tensions.