New Record Low For China Bond Yields Underscores Myriad Risks

Don't look now, but yields on benchmark Chinese government bonds are below 2%. Or were below 2%, however briefly. That might sound like a meaningless threshold, and in some sense it is, but it punctuates an inexorable rally which has vexed officials and at one point prompted the PBoC to intervene with a plan to sell the Chinese long-end. There's no mystery here. To recycle some language from a July article -- the last time I addressed China's bond bubble directly -- bonds are bid in a deflatio