China 10Y Yield Falls After PBOC Policy Shift

China’s 10-year government bond yield fell to around 1.64%, reversing the previous session’s advance, as the PBOC’s shift toward an overnight-rate-based monetary policy framework signaled a move toward lower short-term funding costs. Under the new framework, the central bank will conduct daily overnight reverse repo operations at a fixed rate of 1.25%, moving the overnight rate toward becoming its primary policy anchor and gradually phasing out the long-standing seven-day benchmark. The newly disclosed rate is below the existing seven-day reverse repo rate of 1.4% and broadly in line with market expectations and prevailing funding costs. Meanwhile, disappointing official PMI data underscored persistent weakness in economic activity. The manufacturing PMI fell to a three-month low of 49.3 in October 2026 from 50.1 in September, while the non-manufacturing PMI slipped to 49.7 from 50.2, marking its sixth contractionary reading this year.