Bond Yields Are Surging Around the World — But China Is Bucking the Trend: ‘The Economy Is in Its Own World’

Radhika Anilkumar Nadig

Thu, September 17, 2026 at 5:30 PM GMT+3 6 min read

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A global bond selloff has pushed borrowing costs to multi-decade highs across major economies such as the U.S., UK and Japan, while China's yields sit near record lows.

Yields Are at Levels Not Seen in Decades

"The yield crisis has gone global. Except for China," The Kobeissi Letter said in a post on X on Tuesday, adding that its 10-year yield sits at 1.69%.

Meanwhile, the 10-year yield in the U.S. climbed to 5.04%, its highest since 2007.

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In the UK, 30-year yields are at their highest since 1998, while France's 10-year yield is at its highest since 2008 and Germany's 10-year Treasury yield is at its highest since 2009.

Japan's 10-year bond yield hit its highest since 1996.

"China's economy is in its own world," the market commentator added.

The yield crisis has gone global. Except for China.
Yields are now up to 2007 levels in the US, 1998 levels in the UK, 2008 levels in Germany and France, and 1996 levels in Japan.
In China? Government borrowing costs are near their lowest on record.
This stark contrast is one… https://t.co/QeCdNeSVol pic.twitter.com/GhGBQVNkuL

— The Kobeissi Letter (@KobeissiLetter) September 15, 2026

Why China's Bond Yields Are Staying Low

China is still working through a multi-year deflationary stretch, with the 2021 property crash continuing to drag on consumption and price growth.

That backdrop has reinforced expectations for an accommodative monetary-policy stance from the People's Bank of China.

China's central bank has kept its benchmark loan prime rates unchanged at record lows for 15 straight months as of August, holding the one-year rate at 3.00% and the five-year rate at 3.50%.

Oil Fuels Rate-Hike Hike Bets

The conflict in Iran has sent oil back above $100 a barrel, adding pressure on central banks to raise rates to fight inflation, a major driver of the global rise in bond yields.

The Federal Reserve is expected to raise rates Wednesday for the first time since 2023, with the CME FedWatch tool putting the odds of a hike at 92.4%.

The European Central Bank raised rates last week.

Foreign Investors Are Favoring U.S. Stocks Over Treasuries

Economist Mohamed El-Erian pointed to a Financial Times report, citing Deutsche Bank's analysis of Treasury data, showing foreign investors bought more U.S. stocks than government bonds through June, with international equity flows reaching 2.8% of U.S. GDP versus 2% for Treasuries.

That marks the first time this century, outside brief periods during the COVID-19 pandemic and the aftermath of the global financial crisis, that foreign flows into stocks have overtaken flows into government debt.

From the Financial Times:
"Foreign investors are now buying more US stocks than government bonds….
International flows into US stocks reached 2.8 per cent of US GDP on average in the year to June, overtaking Treasuries — at 2 per cent of GDP — for the first time this century… pic.twitter.com/mVF7tu8Bqt

— Mohamed A. El-Erian (@elerianm) September 15, 2026

Photo courtesy: Shutterstock

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