Chinese government bonds are emerging as a viable alternative reserve asset after holding up through recent geopolitical shocks including the Iran war, according to Gavekal Research. The report challenges a core assumption of global reserve management that US government bonds and the dollar act as “shelters in a storm.” Sovereign bonds in China have held firm amid the recent Middle East tensions, ...
Chinese government bonds are emerging as a viable alternative reserve asset after holding up through recent geopolitical shocks including the Iran war, according to Gavekal Research. The report challenges a core assumption of global reserve management that US government bonds and the dollar act as “shelters in a storm.” Sovereign bonds in China have held firm amid the recent Middle East tensions, analysts Charles Gave and Louis‑Vincent Gave wrote in a report on Tuesday. China’s long-tenor bonds rose in the year following Covid-19 pandemic and stayed relatively flat in the 12 months after the war in Ukraine. US Treasury performance after adjusting for currency moves and gold prices have been unimpressive in comparison during these periods, they wrote. Meanwhile, China’s sovereign debt is underpinned by its ability to produce more electricity at a lower cost than anyone else, according to the report, insulating its bond market from any oil-driven inflation shock. The strategists point out that since 2012, Chinese bonds have been among the few fixed-income markets that beat US inflation. The appeal of China’s sovereign debt as a global reserve asset is also supported by Beijing’s dominance as the world’s industrial and trading superpower, according to Gavekal. This industrial strength suggests that the era of undervalued currency may come to an end. “In an inflationary world, tariffs and the maintenance of a significantly undervalued currency would likely fall by the wayside,” the analysts wrote. “Instead of trade wars, we could see trade deals, more solar panels to the US, more freely flowing rare earths, a stronger renminbi.” “In such a world, the marginal bid would shift away from gold and US Treasuries and toward renminbi and other Asian-currency-denominated assets that offer a yield,” they wrote. Gavekal Has a Provocative Thought on Chinese Bonds: China Today
Tippapatt/iStock via Getty Images The fund posted returns of 1.88% (Institutional shares) and 1.81% (Investor A shares, without sales charge) for the fourth quarter of 2025. Long duration (high interest rate sensitivity) and yield curve positioning, coupled with strong selection in the health care, transportation, and education sectors, drove the fund's positive performance. Idiosyncratic position...
Tippapatt/iStock via Getty Images The fund posted returns of 1.88% (Institutional shares) and 1.81% (Investor A shares, without sales charge) for the fourth quarter of 2025. Long duration (high interest rate sensitivity) and yield curve positioning, coupled with strong selection in the health care, transportation, and education sectors, drove the fund's positive performance. Idiosyncratic positions and modest allocation effects, including underweight positions in the tax-backed sectors, detracted amid outflows at quarter-end and market volatility. The fund had overweight positions in long maturity and positively convex (the rate at which duration changes in response to interest rate movements) bonds, and maintained significant allocations to the health care, transportation, and education sectors. It had underweight positions in short maturity bonds and tax-backed state credits, which reflected a focus on yield, credit quality, and sector resilience. Contributors Strong security selection in the health care, transportation, and education sectors was the primary driver of positive performance. The fund's long duration and yield curve positioning benefited from the Federal Reserve's (Fed) dovish policy shift and the subsequent rate rally. An exposure to resilient Pennsylvania credits and diversified allocations across essential service sectors further supported returns. Active management of portfolio structure and reinvestment of cash flows maximized income during a period of robust supply and demand and favorable credit conditions. Detractors Weak performance was primarily driven by underweight positions in bonds maturing in 15 or fewer years, which performed well during the quarter. Modest negative contributions also resulted from select sector allocations, particularly an underweight exposure to tax-backed state bonds. Additionally, short call bonds performed weakly in the market rally, which further detracted from results. Further insight The fund's solid quarterly...
Nasa announced on Tuesday it has cancelled plans to deploy a space station in lunar orbit and would instead use components from the project to build a US$20 billion base on the moon’s surface, while also planning to send a nuclear-powered spacecraft to Mars. US space agency chief Jared Isaacman, an appointee of US President Donald Trump who took charge at Nasa in December, announced an unprecede...
Nasa announced on Tuesday it has cancelled plans to deploy a space station in lunar orbit and would instead use components from the project to build a US$20 billion base on the moon’s surface, while also planning to send a nuclear-powered spacecraft to Mars. US space agency chief Jared Isaacman, an appointee of US President Donald Trump who took charge at Nasa in December, announced an unprecedented array of changes to the Artemis moon programme that would expand humanity’s footprint in space,...