China Dodging Minsky Moment Is a Signal to Trust
Bonds are doing exactly what you’d expect in a recovering economy. It’s the Treasury market that looks manipulated now.
Still standing. It may be time to trust the signal from China's opaque financial markets.
Photographer: STR/AFP/Getty Images
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It has been an article of faith for a long time that signals from Chinese markets aren’t to be trusted. They are tightly controlled by a government that is increasingly communist in more than name. The two equity bubbles in the last two decades were both driven by incautious governmental manipulation; and the authorities similarly have ultimate control over the debt market. By comparison with the yields on Treasury bonds, which provide the financial baselines for the rest of the world, messages from the Chinese bond market should be treated with more skepticism.