What Effect Does China Have on Bond Markets?

Much as been made of the stock market volatility over the past week - but how have fixed income markets been affected?

Jupiter Asset Management 25 August, 2015 | 5:20PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here is Ariel Bezalel, manager of the Jupiter Strategic Bond Fund, on why he believes rising concern over high debt levels, weak commodity prices and other deflationary forces may put a ceiling on economic growth and inflation for some time to come. 

We had been pessimistic about the prospects for global growth for some time prior to yesterday’s sharp sell-off across global equity markets. The sudden deterioration of a range of leading indicators last week, coupled with another leg-down in prices of global commodities, appears to have been taken by the market as an indication that global economic activity is weakening further, led by China.

Market sentiment, already jittery ahead of a possible September rate rise by the US Federal Reserve, was chilled further by China’s yuan devaluation two weeks ago, leading to emerging market currencies and assets once again being crushed, with many already at record lows against the dollar.

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Jupiter Asset Management  Jupiter Fund Management is a UK fund management group, managing equity and bond investments for private and institutional investors.