Institutions snapping up Chinese treasury bonds are shorting the economy, state media says
What are financial institutions doing with Chinese government bonds?
Financial institutions are heavily purchasing Chinese government bonds, causing bond prices to soar and yields to plummet to historic lows. This bond-buying frenzy has raised concerns among China's policymakers about a potential bond bubble and the risks of a crisis similar to the collapse of Silicon Valley Bank. The People's Bank of China has taken action to intervene directly in the bond market in an attempt to cool the situation.
Why are institutions said to be shorting the Chinese economy?
Institutions are said to be shorting the Chinese economy because they are rapidly purchasing Chinese government bonds, which implies an expectation of lower interest rates in the future1. This action potentially puts downward pressure on the yuan and may lead to capital outflows, which could negatively impact China's economic growth.