As Treasury Pain Goes On, China's Traders Lick Their Wounds
- China yield premium has declined to least since April
- Analysts are expecting China-U.S. bond yield gap to narrow
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China’s bond traders know all too well how painful it is when markets suddenly start pricing in higher inflation. But at least for them, it seems to be in the rear-view mirror.
Treasuries are gripped in their worst start to the year since 2009, with 10-year yields spiking toward 3 percent and contagion spreading to equities. In contrast, sovereign yuan bonds are holding steady following last year’s selloff. That means China’s yield premium over Treasuries is rapidly shrinking, and is now the smallest since April.