Bond Yields Fell in the First Half of 2026, Pressuring Returns on Fixed-Income Wealth Products

China's bond market posted a choppy but steadily rising trend in the first half of 2026, with yields on government bonds fluctuating lower and credit spreads generally narrowing.

According to Jin10, the move came as China's central bank maintained a moderately accommodative stance, liquidity conditions stayed ample, domestic demand remained weak, and an ongoing shortage of investable assets persisted.

In government bonds, the 10-year China government bond yield rose to an intrayear high of about 1.9% in early January before retreating. By late June, the 1-year and 10-year China government bond yields closed at about 1.12% and 1.73%, down about 22 basis points and 11 basis points from the start of the year.

In credit bonds, yields on AAA-rated 3-year and 5-year local government financing vehicle bonds fell by about 24 basis points and 21 basis points from the start of the year, while declines were more pronounced for AA-rated bonds.

The report said returns on pure fixed-income wealth management products also faced downward pressure. Data showed that as of June 30, 2026, wealth management companies had 14,922 outstanding public pure fixed-income products, including different share classes.

Based on the distribution of net asset value growth over the past six months, 82% of products posted gains of less than 1.5%, which translates to an annualized return below 3%. Products with gains in the 1.5% to 3.5% range accounted for 17.9%, while only eight products recorded gains above 3.5%.

The report said that under multiple constraints, a low-volatility return environment for pure fixed-income products may become the norm.