US-China Interest Rate Gap May Sustain-Caixin

The reversal in US-China interest rate differentials in long-term government bond yields is likely to be sustained due to policy divergences, but the impacts on capital outflows from China are reducing, Caixin reported Wednesday. Since the end of May, the outflow from domestic equity and bond markets has slowed to a marginal pace as the pandemic situation gets better in major cities, the report said citing a note from China Merchants Securities. The 10-year CGB yield will remain at a low level since economic indicators have shown a slow recovery and inflation is seen largely in check for now, market analysts said.