US-China bond yield spread surges to 312 bps, risking capital outflows

MacroDigital Finance
โดย Money & Banking·USCN·Read original
Summary · why it matters

The yield spread between 10-year US and Chinese government bonds has surged to 312 basis points, approaching the record high of approximately 315 bps set early last year, amid divergent monetary policies. The 10-year US Treasury yield has risen to 4.81%, its highest level in nearly three years, while the Chinese bond yield has held steady at 1.69%. This movement increases the risk of capital outflows from China, as Chinese assets become less attractive compared to US assets. However, analysts such as Jeffrey Zhang from Credit Agricole CIB believe that the risk of rapid capital outflows remains limited, given China's stable fiscal and monetary policies, and that foreign investors' holdings of Chinese bonds account for only 4.6% of the total market. Meanwhile, the yuan has appreciated by nearly 4% since the start of the year and is trading at around 6.72 yuan per dollar.

Impact on stocks 3

Financials▲ · 1 stocks
Others± Mixed · 2 stocks
％China Government Bond 10Y
CN-10Y
▼ NegativeMonetaryrelevance

Divergent monetary policies keep Chinese bond yield steady at 1.69%, but the widening spread with US yields increases capital outflow risk, pressuring bond prices.

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