Record China-US gap in bond yields unlikely to trigger capital flight: Marsh Investment

The widening yield spread between Chinese and American government bonds is unlikely to trigger catastrophic capital flight from China, according to investment executives at Marsh Investment, who attribute the record spread to the United States’ fiscal pressures and global macro trends rather than a structural retreat for Chinese assets.The spread between benchmark 10-year US Treasury bonds and equivalent Chinese sovereign bonds hit a record 3.17 percentage points this week. Yields on US Treasury bonds rose to 4.85 per cent – their highest level since 2023 – while China’s 10-year yield held at 1.68 per cent.While the expanding gap has raised fears that higher US returns could siphon capital away from Chinese assets and weigh on the yuan, executives at Marsh Investments – formerly known as Mercer – downplayed the risk during a media briefing on Thursday.