Why Xi Jinping Needn't Worry About China's Yield-Curve Inversion
What Xi's Party Congress Speech Means for Investors
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China’s bond market has just turned upside down again. But unlike in the U.S. -- where an inverted yield curve can signal an impending recession -- there’s much less reason for President Xi Jinping to worry.
That’s because the anomaly is pretty much government-driven, with the central bank driving short-term rates higher to tamp down excessive leverage. Policy makers have stepped in on occasion to prevent excessive tightness, through cash injections or targeted easing. Yields also have climbed this week because of signs of an improving economy, with People’s Bank of China Governor Zhou Xiaochuan suggesting that growth may surprise to the upside.