What is behind China’s perplexing bond-market intervention?
The central bank seems to think the government’s debt is too popular
Many governments live in fear of bond-market “vigilantes”, investors who punish errant policies by aggressively selling the sovereign’s debt, driving down its price and thereby pushing up its yield. Financial regulators also worry about bond-market malfunctions, such as unsettled trades, when one party to a transaction fails to honour its promises. These mishaps can send ripples of anxiety through an entire financial system.
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This article appeared in the Finance & economics section of the print edition under the headline “The vigilante next door”
Finance & economics August 17th 2024
From the August 17th 2024 edition
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