STIR: RBA Sep Hike Near Fully Priced, Aug Inflation Will Guide Follow Up Risks

The China 10-year government bond yield is expected to fall to around 1.6% in the second half of the year, while the yield on 30-year government debt may approach 2.0%, Yicai.com reported citing analysts. The bullish narrative in the bond market since July will likely continue, supported by the rapid adjustment in the technology sector and the decline in market risk appetite, at the backdrop of rising expectations of monetary easing after economic momentum weakened. Near-term disruptions, including signs of marginal tightening in interbank liquidity and a potential acceleration in government bond issuance, are unlikely to alter the bullish trend but cause some fluctuations in long-term interest rates, the newspaper said citing analysts. 

More Chinese cities are expected to introduce interest subsidies on housing mortgages, with analysts calling for the measure to be included in the next round of additional national policy support, Yicai.com reported. The weighted average interest rate on newly issued commercial personal housing loans nationwide has held at 3.06% for three consecutive quarters, while banks’ net interest margins remain at historic lows, prompting growing calls for government subsidies to ease the burden on homebuyers. More than 20 cities, including Shanghai and Guangzhou, have introduced mortgage interest subsidies since 2026. However, fiscal sustainability would be the biggest constraint if the policy were expanded nationwide, analysts said.