What America's high bond yields and China's low rates tell us

Neither high yields nor low ones are inherently reassuring – they reflect different economic conundrums In China, companies remain reluctant to borrow and invest, while households are cautious about spending. PHOTO: BLOOMBERG FOR much of the past four decades, sovereign bond markets drew a relatively clear distinction. Advanced economies generally borrowed cheaply, while emerging economies paid a premium for fiscal, inflation and institutional risk. That distinction is blurring. A motley group of advanced economies – the US, the UK, France and Japan – is now among the leaders in government bond yields. But perhaps the most revealing development is the divergence between the world's two largest economies: US yields are rising while China's are falling.