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China’s $11 trillion government bond market has moved into uncharted territory. As their government rolls out widespread stimulus, yields are hitting record lows. The gap between yields in Japan and China are now at a record low of just ~70 basis points. China is in trouble. Meanwhile, yields in the US are skyrocketing with the 10-year now nearing 5.00%. The spread between China and the United States’ 10-year yield just hit a record 294 basis points. Never in history has the spread been even remotely this large, with the average at ~100 bps. Multiple indicators show a general slowdown of China’s economy contributing to these moves. Increases in both industrial production and consumption have slowed significantly. In fact, retail sales growth is now at ~2% and on track to hit the lowest since the pandemic. Simultaneously, China’s central bank is buying gold like never before. China’s gold holdings rose to 72.96 million fine troy ounces at the end of November. They now hold $193 BILLION worth of gold in reserves and continue to buy even as gold prices hit record highs. On September 26, China began its largest stimulus since 2020:
Still, the economy is experiencing deflation. Since 2008, China’s Debt-to-GDP ratio has more than doubled to 366%. This is TRIPLE the Debt-to-GDP ratio seen in the United States. Combine this with incoming tariffs in 2025 and China’s economy is in need of a major restructuring. Recent stimulus has not been enough. Currently, China is facing its longest period of DEFLATION since 1999. Not even 2008 came with 5 straight quarters of deflation, as we are seeing now. While everyone is fighting inflation, China is dealing with severe deflation. This is arguably even worse than inflation. Furthermore, China’s oil demand has collapsed. China’s crude oil imports declined by 3.4% in the first 10 months of 2024, the largest drop since the pandemic. China has effectively reduced their crude oil imports by 411,000 barrels PER DAY. Oil producers are panicking. The wildcard for China in 2025 is President Trump’s tariff policies. Electric vehicles have become a hot topic as China now controls 39% of the global auto market. Tariffs could send China into a recession. submitted by /u/XGramatik |
📊🤓⚡️ US500 Decisive Momentum! ⚡️ The asset is downtrend, and the price tests the resistance level of 5940.🤔
⚡️ US500 Decisive Momentum! ⚡️ The asset is downtrend, and the price tests the resistance level of 5940. 🔼 If