China Worries Help Fuel the Bond Market Rally
Fixed-income markets have found reasons to be cheerful in recent weeks. It may not last.
Police officers stand guard in Beijing.
Source: Bloomberg
The 10-year US Treasury yield is typically regarded as the best temperature gauge for assessing global economic worries. It has fallen by more than 50 basis points in the past three weeks to below 3.70%, showing how popular the safety of fixed-income bonds suddenly is again over more volatile equities.
What's changed after a year when the benchmark yield almost trebled from 1.5% in January to a peak of more than 4.3%? The short answer is pervading gloom about the outlook for growth, along with a bit of inflation cheer. But now there is a third element — the potentially seismic impact of an uprising in China.