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New all time lows for bond yields this morning on China’s weekend data with the two year hitting 1.54% and ten year hitting 2.2%:
The short end of the curve is already negative in real terms and with a falling currency one wonders how long international money can hang in there. Having said that, with portfolio’s focused on return of capital versus on capital the trade marches on. The problem will come when lousy coupons pair with face value losses and currency risk all at once…
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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