China bond market diverges from US as Warsh strikes hawkish tone at Jackson Hole

On Aug 31, 2026

The yield on China’s 10-year government bond traded at 1.692 per cent on Monday, approaching the lowest in a year after the key set of economic figures trailed analysts’ estimates in July. Brokerages including Great Wall Securities predicted that strong momentum would drive the yield to a low of 1.65 per cent.

In the US, the 30-year yield was wavering near a two-decade high of 5.304 per cent, with investors continuing to demand the so-called term premium even after Treasury Secretary Scott Bessent said he would double a buy-back programme to rein in the bond rout.

Warsh’s surprisingly hawkish comment at the Jackson Hole symposium on Friday came as the latest frustration for Treasuries. The front-end yields rose immediately after Warsh focused his speech on restoring price stability, implying policy priority of inflation over employment.

Warsh’s scrapping of forward policy guidance in a shift of approach to market communications may add more volatility to US Treasuries.

“Volatility of US Treasuries may be bigger than expected,” said Li Xianglong, an analyst at Great Wall Securities. “But that will have a limited impact on China’s bond market, which will trade on its own logic.”

The disconnect between the world’s two largest debt markets will have implications on reshaping global capital flows across assets, with investors seeking diversification from US assets amid record fiscal debts and unbridled bond issuance by the Trump administration.

Source link