18 Jul Rising mid- and long-term interest rates in China cannot continue forever
Over the past week, the 7-day interest rates dropped to 2.2%, as low as the rate at beginning of this year; while the 10-year yield curve rates rose to 3.2%, hitting a new high for 2019. Rising risk-free rates reflect the change of market expectation and investor demand.
First, macroeconomic expectations lifted based on the positive effect from the credit recovery to economic growth. Secondly, inflationary expectations are rising. Finally, capital flowing from the bond market to other equity markets strengthened the yield curve.