Chinese Onshore, Offshore Bonds Favored, Mizuho Securities Says

The video discusses the current state of emerging market (EM) dollar bonds, noting a significant jump in valuations since the taper tantrum of 2013. It explores whether it's too early to invest in these bonds or if the yields are too attractive to ignore. The discussion highlights the role of the Federal Reserve's policy normalization and its impact on U.S. Treasury yields and the dollar, which in turn affects EM assets. Despite strong fundamentals in some regions, the tightening liquidity and rising funding costs pose risks to asset prices. The video also examines the balance between dollar bonds and local currency investments, with a focus on the Chinese and Australian bond markets, considering the different stages of policy cycles of the PBOC and RBA.

In what ways do Chinese investors influence the demand for U.S. dollar bonds?

What are the implications of tightening liquidity on asset prices in emerging markets?