China’s 10-year government bond yield dropped further below 1.8% on Tuesday, approaching a three-week low, as investors continued to seek safer assets amid risks of further escalations in the Middle East conflict. A senior US official indicated that Washington may significantly ramp up strikes on Iran within 24 hours, targeting missile production, drones, and naval assets. Meanwhile, Iran warned that ships attempting to transit the Strait of Hormuz, a key chokepoint for roughly one-fifth of global oil shipments, could be targeted, effectively stalling tanker flows and raising global supply risks. As the world’s largest oil importer, China faces higher energy costs that could weigh on economic growth and stoke domestic inflation. Attention now turns to Beijing’s annual “Two Sessions” from March 4–11, where authorities are expected to set economic targets, outline policy priorities, and release the 15th Five-Year Plan for 2026–2030.
