Global Markets
Home›Global Markets›Trade & Tariffs›Record China-US bond yield gap unlikely to spark capit…
Record China-US bond yield gap unlikely to spark capital flight
The 10-year spread reached 3.17 percentage points this week, with US Treasury yields at 4.85% and China’s 10-year yield at 1.68%.
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, formerly known as Mercer. The spread between benchmark 10-year US Treasuries and equivalent Chinese sovereign bonds hit a record 3.17 percentage points this week, as US 10-year yields rose to 4.85%, the highest level since 2023, while China’s 10-year yield held at 1.68%.
Executives said the risk of capital shifting to higher US returns is small compared with other forces moving the dollar and US rates. Marsh Investment’s global chief investment officer, Niall O’Sullivan, attributed elevated long term US yields to global supply and demand imbalances, expanding US national debt, and heavy corporate borrowing, especially in the technology and artificial intelligence sectors.
The unusually wide gap has also fed debate over whether high US borrowing costs and rising government debt could eventually weaken the dollar’s dominance in global finance, though Marsh executives emphasized that capital flight is not the main driver versus broader macro factors.