Download PDFYields on U.S. Treasury Notes continue to languish near 1.5% despite surging inflation and skyrocketing real gross domestic product (GDP) growth. The popular explanation for this dichotomy is financial repression and the Federal Reserve’s relentless absorption of government debt. Meanwhile, the level of private sector savings remains trillions higher than pre-pandemic levels.
In addition, the world’s second-largest economy has been pumping the brakes hard enough that its credit impulse has gone negative. According to Director of Global Macro Research Francis Scotland, “It’s a global economy, and China has been the high-beta source of global growth for over 10 years. What happens next in China could be as important or more than what happens stateside in the U.S.”
Correction: This chart was published originally with an incorrect time lag in the China credit impulse data. The chart and data have been updated.
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