Today’s markets analysis on behalf of Joseph Dahrieh, Managing Principal at Tickmill
The Chinese yuan continues to depreciate, while the 10-year government bond yield remains steady at 1.78%. The yuan’s weakness reflects external pressures, particularly global trade tensions, which could hinder economic stability. However, the People’s Bank of China (PBoC) is working to strengthen capital reserves in state-owned banks, which could support the economy and provide a buffer against further currency depreciation. Enhanced capital reserves could also contribute to investor confidence, offering some support for the yuan in the medium term.
However, concerns over the impact of President Trump’s tariffs on Chinese imports could add further pressure on the yuan and could affect bond yields. Additional measures from the US administration could make the yuan weaker while current concerns could continue to weigh on sentiment. The Chinese currency could also react to upcoming economic data releases with PMI data expected in the coming days. Stronger-than-expected figures could help the yuan rebound to a certain extent.