China Bond Markets
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Over the month of April 10 -year Chinese onshore government bond yields rose by 40 basis points. This movement can be explained by a modest economic recovery and picked up inflation. “We believe, however, that China is still far away from fully stabilizing and that the Chinese government will need to continue to support growth through fiscal and monetary policy”, said our fixed income specialist Althea. She also mentioned, although it seems that an agreement between the US and China is going to be reached shortly, it is unlikely that the US will completely remove its punitive tariffs. In this context, Chinese government bond prices will be supported in the medium term.
In the long run, Chinese sovereigns should also benefit from a gradual opening of the Chinese bond market through increased foreign demand. We believe that foreign investors will continue to find these securities attractive because Chinese government bonds are less correlated to other major markets while at the same time offering higher risk-adjusted returns in a yield-starved environment.
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Outrageous Predictions 2023: The War Economy
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Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
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A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
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