The China-US 10Y yield spread widened by 6.85bp this week to -3.0521%.The rise in UST yields is therefore becoming less of a constraint on China’s long-end rates at the margin.The still-deeply inverted China-US yield spread leaves limited room for further RMB appreciation.
Last week,The 10Y CGB yield decisively broke below 1.70% and held there.The 30Y still has ~20bp of downside before revisiting its previous low.Meanwhile, the acceleration in long-dated CGBs supply in H2 looks more like a psychological headwind than a fundamental driver of rates.