“What worries policymakers is the interest rate risk, which will rise once the dominant narrative shifts from deflation to reflation,” Hu from Macquarie said. If that happens, bond yields will rise as investors switch back into riskier stocks. The country’s “4,000 or so small and medium-sized banks” will be particularly vulnerable to the interest rate risk, he added. “The bubble formed by the rush of funds into the bond market is accumulating interest rate risks,” the Securities Times said in an editorial. Economic risksThe rapid decline in Chinese bond yields also poses significant risks to the economy.

Source: CNN July 03, 2024 17:30 UTC