Comment on China's bond market is signaling worry over a possible decades-long economic downturn

China's bond market is signaling worry over a possible decades-long economic downturn

Chinese leader Xi JinpingLi Xueren/Xinhua via Getty Images; iStock; Rebecca Zisser/BIChinese bond investors have grown increasingly pessimistic in recent weeks.Yields on the 10-year government bond have plunged to all-time lows.Analysts are likening the situation to Japan's "lost decades," a deflationary era marked by a steep economic slowdown.Yields on China's government bonds are tanking, triggering worries that the world's second-biggest economy could be facing a multiyear economic downturn.The country's bond yields have plunged to record lows in recent weeks, falling below levels seen during the COVID-19 pandemic and the global financial crisis of 2008.The two-year yield has nearly broken below 1%, while the 10-year bond yield has dipped below 1.6% for the first time ever, making for a 300-basis-point gap with the US bonds.

 

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