Commentary
Large net capital flows out of China have officially become a trend as Chinese fixed-income securities have lost their luster to foreign investors.
Capital drawdowns out of China’s interbank bond market exacerbated and continued for the third straight month in April. Most experts blame the shift on a declining yuan currency and lower yield premium over similar U.S. government bonds as the Chinese central bank monetary policy diverges from the United States’ more hawkish stance.
The about-face is in stark contrast to the trend from the last few years, when yield-starved foreign investors flocked to the Chinese bond market due to extremely low yields of U.S. debt compared to Chinese debt of the same tenure, even adjusted for risk….