Chinese bonds appear at a historical turning point as yields prepare to climb from record lows amid easing deflationary pressures. The benchmark 10-year yield could rise toward 2% or higher this year from around 1.8% currently, while the spread between five-year and 30-year notes has widened to its widest in four years.

Recent upbeat data, including a growth rebound and moderating factory deflation, have shifted sentiment in the world's No. 2 economy. Analysts like Lynn Song at ING Bank declare the "deflation trade has reached an inflection point," with Kaiyuan Securities forecasting yields returning to 2%-3% later this year as inflation gains momentum.

Global banks including Goldman Sachs and ANZ have withdrawn forecasts for a PBOC rate cut, while rising yields in China may impact other emerging markets. Adam Marden at T. Rowe Price argues the "disinflationary impulse" from China is fading, potentially creating more challenging conditions for central banks globally.