Sharply rising pork prices in China, caused by the impact of African swine fever, have threatened to turn inflation-adjusted bond yields in the country negative. Bondholders face returns of 0.2%, after factoring in inflation, compared to 2% in Korea and more than 2.5% in India. Domestic investors are suffering most as the Chinese government does not sell inflation-linked bonds to help boost returns. China’s National Bureau of Statistics said pork prices should return to normal. The U.S. dollar has been under pressure since last week’s Brexit vote on whether Britain will leave the European Union.
Sharply rising pork prices in China, caused by the impact of African swine fever, have threatened to turn inflation-adjusted bond yields in the country negative. Bondholders face returns of 0.2%, after factoring in inflation, compared to 2% in Korea and more than 2.5% in India. Domestic investors are suffering most as the Chinese government does not sell inflation-linked bonds to help boost returns. China’s National Bureau of Statistics said pork prices should return to normal. Subsidies and support for pig breeders has increased, but analysts have suggested a drop may be slow as inflation could continue rising.