Rising yields and market sensitivity

China and its corporate debt ratios remain the Achilles heel of the global economy

The markets are in the midst of a strong reflationary trade, with most investors convinced that global growth is accelerating, inflation is starting to rise and the dollar will strengthen. With the election of Donald Trump as US president, investors believe he will cut taxes, boost infrastructure spend and cut red tape. With a strong pro-business agenda, we will see accelerating US growth or so goes the narrative.

One of the natural outcomes of this reflationary trade is the rise in bond yields. If growth and inflation are both accelerating, bond yields will rise. This is especially so given the