I'd say that based on the pic, my experience with Teddy (who is cottony) and this link
Judging the Yorkshire Terrier by Dr, your puppy will probably have a cottony coat as an adult.
"The Yorkshire Terrier does not go through significant coat changes as do many other breeds, it is a single coated breed at birth through senior years. One of the easiest checks for the quality and texture in a Yorkie puppy is to check the feet. This is one of the first places that changes on the Yorkie. A soft coated puppy will have a fluffy foot in which the hair stands full and away from the foot. This coat quality and texture will not change as an adult and even if it changes will be what is referred to as a clerical grey. This coat will also not reflect a metallic like sheen back at you no matter how many products are put on the coat. The correct silk coat will lie flat to the foot with little volume and this occurs at a young age. "
There are some pics in my album of Teddy when he was a puppy and he had little, fat and furry legs which gave his coat type away, too!
I love him and think your baby is adorable.