China Yield Premium Over U.S. Vanishes With More Outflows Seen
- Treasury 10-year yields surpass China bond yield of same tenor
- PBOC may cut a key lending rate this week to support growth
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China’s yield advantage over Treasuries disappeared for the first time in more than a decade, paving the way for more capital outflows to follow the recent record exodus from the Asian nation.
The yield spread between Chinese 10-year bonds and comparable Treasuries turned negative on Monday, the first time it has done so since June 2010. The move has been coming for weeks as the Federal Reserve starts on an aggressive rate-hike cycle while China looks set to ease further.