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  • The China-US 10-yr yield spread has widened to 20-month highs.  
  • Yuan is losing altitude despite the uptick in the yield spread.  

The spread between the 10-year Chinese and US government bond yields has risen to 158 basis points, the highest level since December 2017.

Put simply, China’s 10-year bond is now yielding 158 basis points more than its US counterpart. Even so, China’s Yuan is losing altitude against the greenback. The USD/CNY pair is currently trading at 7.1568, the highest level since February 2008

It is worth noting that the 10-year yield spread is currently up 95 basis points on a year-to-basis while Yuan is reporting 4% losses on a year-to-date basis.

The Chinese currency has come under pressure due to escalating Sino-US trade tensions.

Yield spread