Growth Challenge in Aging China and Rising Bond Yields

Bonds Collide with Mortgages and Aging China’s Growth Challenge

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

Rising Bond Yields

  • Rising bond yields impact equities, dollar and metals.
  • Yields rose as vaccines, high savings rate boosted growth outlook.
  • Mortgage prepayments by homeowners surged when rates were low.
  • Prepayments led to hedging by mortgage bond holders, raising yields.
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China’s Pace of Growth Set to Slow 

  • China’s population aging rapidly, birthrate remains low.
  • Massive rural-urban migration had fueled double-digit growth.
  • Rural-urban migration has slowed, little growth in urban labor force.
  • China’s pace of growth this decade and in the 2030s likely to slow.
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