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Lillian McKenna

How did US Treasury yields react to the weak Chinese GDP data?

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According to official data released by the Chinese Government earlier today, the country's economy grew by 6.2% in Q2 2019, which marked a new low given that such a figure was last reported in 1992.

US Treasury yields rallied in the pre-market session following the release of the weak Chinese data in a flight to safety trade as investors flock to the safe-haven US dollar and US bonds and sold the riskier Chinese assets among other similar assets.

The latest data indicates that the stimulus measures implemented by Beijing may not have trickled down to the entire economy despite the lower interest rates which were meant to encourage borrowing and the recent tax cuts that were aimed at boosting the world’s second-largest economy.

China’s economy continues to struggle as the Sino-US trade war continues to drag on amid a global economic slowdown, which has investors worried that the current macro environment is likely to trigger a major financial crisis similar to that of 2008.

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