China's sovereign bonds are rallying once again as economic weakness, sliding stocks and expectations for greater monetary policy support revive demand for fixed-income assets. The 10-year government bond yield fell to its lowest level since 2002, reflecting deepening pessimism about growth prospects. Investors are positioning for the upcoming Politburo meeting, where leaders are expected to signal further stimulus measures.

The bond rally coincides with a CSI 300 index decline, highlighting a flight to safety as equity markets falter. PBOC officials have hinted at additional rate cuts and reserve requirement reductions to support the slowing economy. Property sector distress and weak consumer spending continue to weigh on sentiment.

Analysts say the yield curve is pricing in a prolonged period of easy monetary policy. The spread between 10-year and 2-year yields has narrowed, suggesting limited confidence in a near-term recovery. Foreign investors have increased holdings of Chinese government bonds for the third consecutive month.