Chinese government bonds ‒ a high yield market in a low yield world

Chinese government bond yield spreads are still near multi-year highs despite the recent backup in US Treasury yield (which has now extended to some Asian markets).

Chinese spreads widened sharply relative to G7 peers in 2020, as policy diverged substantially, and government bond yields elsewhere collapsed; despite some marginal narrowing recently, 7-10 year Chinese government bond yields are still some 400 basis points above 7-10 year Bund yields, and 300bp above World Government Bond Index (WGBI) yields

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