Chinese government bonds continued to deliver positive returns in local currency in June, and remained top performers in US dollar terms year-to-date, despite some currency weakness. Chinese sovereign vs US Treasuries spreads stayed negative. Chinese $ high yield negative YTD returns doubled in Q2.
Growth forecasts for 2023 overall are looking more anaemic. Central banks have dialled up their policy actions by implementing increasingly aggressive rate hikes to control spiralling inflation, including those in Asia Pacific. RMB loans YoY growth remains lower than pre-Covid levels.
Consensus downgraded its growth forecasts for the US, UK and Eurozone in June on expectations of more aggressive central bank actions following the Fed’s 0.75% rate increase in June.
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