China interbank bond yields rise, 10Y and 30Y hit highest since early April

China interbank bond yields rise, 10Y and 30Y hit highest since early April

China's interbank bond yields saw a significant increase on Thursday, with the 10-year and 30-year maturities hitting their highest levels since early April. The Ministry of Finance sold 30-year special sovereign notes at an average yield of 1.97%, marking the highest yield since March [1].

The auction, which amounted to 83 billion yuan ($11.6 billion), was influenced by improved risk sentiment and a cooling of concerns over further losses. The government's long-term debt faced pressure this week due to optimism around a potential extension of the US tariff truce and Beijing's efforts to curb industrial oversupply. This optimism has reduced market pessimism about China's growth outlook [1].

In addition to the auction results, futures on Chinese longer-term government bonds extended their declines into a seventh consecutive session on Thursday morning. This trend follows a prolonged period of losses since the contracts were launched in April 2023 [1].

Looking ahead, traders are concerned about a potential increase in long-term debt supply if the government ramps up fundraising and spending to support the economy, particularly if there is a budget deficit increase later this year. These factors contribute to the current rise in bond yields, indicating a shift in market sentiment.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-24/china-s-30-year-bond-auction-draws-highest-yield-since-march