China 10-year bond yield hits 1.71 percent as repo trading falls
China's financial markets saw bond custody expand to RMB207.4 trillion in July 2026, while the 10-year government bond yield settled at 1.71 percent. The People's Bank of China reported lower interbank turnover alongside steady money market rates.
Yield curves flatten under issuance
In July 2026, net government bond financing rose by RMB69.46 billion year on year to RMB1,317.64 billion, while enterprise bond issuance added RMB453.59 billion.
Outstanding bonds in custody reached RMB207.4 trillion at month-end.
The 10-year China government bond yield closed at 1.71 percent, with the 10-year to 1-year spread narrowing by 4bp to 57bp.
In the money market, average daily interbank lending turnover fell 24.3 percent year on year to RMB323.29 billion, and daily repo turnover declined 14.2 percent to RMB6.5 trillion.
The overnight depository repo rate DR001 averaged 1.39 percent, up 1bp month on month, while the 7-day DR007 rate dropped 2bp to 1.43 percent.
Concentration at the top
Institutional holdings of corporate credit bonds remained highly concentrated, with the top 50 investors controlling 54.2 percent of holdings and conducting 62.1 percent of secondary trading.
Equity markets weakened, as the Shanghai Composite fell 6.4 percent to 3,832.3 points and the Shenzhen Component dropped 16.2 percent to 13,578.9 points.
The yuan appreciated 0.56 percent against the US dollar to 6.7476. Meanwhile, commercial draft balances grew 11.1 percent to RMB22.1 trillion.
Scale without structural depth
The decline in repo turnover reflects rising caution across Chinese money markets despite heavy sovereign issuance.
Heavy concentration of corporate credit trading among a handful of players keeps secondary liquidity fragile.
While overall debt volumes continue to surge, institutional depth remains remarkably narrow.
Source: Financial Market Report (July 2026)
IN: