China 10-year bond auction hits all-time demand record

China's benchmark 10-year sovereign bond auction on Wednesday drew the strongest demand ever recorded, with the bid-to-cover ratio reaching 7.23 — an all-time high — as investors rushed to lock in yields amid expectations of prolonged monetary easing and sluggish economic growth.gurufocus+2

Unprecedented Appetite for Safety

The record demand came even as 10-year yields hovered between 1.71% and 1.74%, well below 2% and extraordinarily low by global standards. Investors are effectively betting that China's economy will remain in a low-growth, low-inflation environment for years to come. The auction follows a pattern of surging demand: in January, a seven-year government bond sale drew a then-record bid-to-cover ratio of 5.91, according to Bloomberg.tradingeconomics+2

China's Ministry of Finance has been issuing sovereign debt at a rapid pace, with record issuance volumes in early 2026 exceeding 522 billion yuan — roughly $74 billion — as part of the government's broader fiscal stimulus push. The People's Bank of China has also been actively managing the yield curve, conducting net bond purchases of 10 billion yuan in June.kucoin

PBOC Doubles Down on Loose Policy

The auction results landed on the same day that the PBOC pledged to maintain an "appropriately loose monetary policy" and ramp up financial support to revive domestic consumption. Following its second-quarter monetary policy committee meeting, the central bank acknowledged the economy faces a mismatch between strong supply and weak demand, according to Reuters.businesstimes+1

The PBOC said it would strengthen guidance on policy interest rates, promote a reasonable rebound in prices, and keep the yuan stable. The central bank has refrained from cutting policy rates or reserve requirement ratios since May 2025, instead focusing on refining its policy framework and improving transmission mechanisms.money.usnews+1

International Access Broadens

Adding momentum to the rally, LCH London Stock Exchange Group plc Limited announced it has begun accepting offshore Renminbi-denominated Chinese Government Bonds as eligible non-cash collateral, with settlement through Euroclear Bank. The move, which had been in preparation since mid-2025, is designed to provide greater flexibility for international market participants and further cements China's bond market as a destination for global capital.finadium+2

Foreign investors held approximately $295 billion in Chinese Government Bonds as of mid-2026. Hong Kong Exchanges and Clearing is also set to launch five-year CGB futures on August 3, adding another access point for international investors seeking exposure to China's sovereign debt market.linkedin+1