China’s bond yields hover near record lows as UK gilts surge past levels not seen since 1998

The global bond market is doing something it rarely does: telling two completely opposite stories at once. China’s 10-year government bond yield sits at roughly 1.68%, pinned near historic lows by an economy that keeps disappointing. Meanwhile, UK 30-year gilt yields have climbed to approximately 5.95%, their highest level since March 1998, driven by inflation fears and a geopolitical landscape that refuses to calm down. The spread between Chinese government bonds and comparable US Treasuries now exceeds 300 basis points. China’s economy is flashing warning signs The numbers coming out of Beijing paint a bleak picture. Urban fixed-asset investment, a key measure of capital spending across the economy, contracted by 7.2% year-on-year through August 2026. Retail sales growth limped in at just 0.4% in August, missing forecasts by a wide margin. China’s unemployment rate reached 5.3% in August. Analysts at Barclays and HSBC have flagged the unusual disconnect between Chinese yields and the direction of global rates, with several predicting that yields in China could actually fall further from here. The People’s Bank of China is operating in a different universe from its Western counter...