China bond yields hit lows as Hong Kong launches yuan futures

China's 10-year government bond yields have fallen to 1.67%, the lowest level since mid-2025, as markets anticipate increased stimulus from Beijing. This decline follows disappointing economic data regarding industrial production, retail sales, and fixed-asset investment, which have caused growth estimates to slip below the government's official target range of 4.5% to 5.0%.

To support the financial system, the People's Bank of China injected approximately 349 billion yuan ($51.7 billion) through an overnight reverse repo operation on August 15. Investors are now looking toward the National People's Congress Standing Committee session scheduled for August 25-28 for potential further fiscal or monetary support.

In the offshore market, the Hong Kong Stock Exchange has launched five-year China government bond futures. This move is intended to provide international investors with an exchange-traded tool to hedge against yuan interest rate exposure, strengthening Hong Kong's position as a premier hub for yuan-denominated assets and risk management.