Chinese government bonds have sidestepped a global debt sell-off since the start of the Iran war, as the world’s second-biggest economy emerges as a haven from soaring energy prices and rising global inflation.
Yields on China’s 10-year government bond have dipped marginally to 1.81 per cent since the end of February. In contrast, yields on 10-year US Treasuries have surged by 0.38 percentage points to 4.34 per cent, while yields on gilts have rocketed by 0.7 percentage points. Bond yields rise as prices fall.
Investors are betting that whereas major central banks in the US and Europe will be forced to keep interest rates at higher levels than previously expected to counter inflation triggered by rising oil and gas prices, China will be relatively insulated thanks to its energy mix and very low inflation before the conflict.