Three Bond Markets, Three Different Worlds

Alpine Macro's Chen Zhao on the three macro stories that matter right now. (1) America: the bond selloff has likely crested — 10Y down 30+ bps to 5.1%, and the contrarian evidence (bearish crowd, 6% calls, Economist cover, heavy shorts) says yields topped; hot CPI/PPI produced curve flattening, not a selloff — the long end fears growth. Tech rout is 'healthy'; roadmap stays 'wobble now, new highs later'; rebalance 70/30 to 60/40. (2) France: OAT-Bund 140-150bp, a state spending 58% of GDP, 5.4% deficit, 120% debt, borrowing at 4.8% vs 2% nominal growth — the debt-trap math; Le Pen's plan lacks a 'how'; no Draghi moment yet — short the CAC on strength, EUR toward parity in 2027. (3) China: easing + weak economy + record-low yields + one of the world's strongest currencies — explained by internal depreciation (15% undervalued REER) and a Japan-1990s-style capital recycling problem (00B+ surplus with nowhere to go); the CGB bull continues while CNY stays strong, and China's excess savings quietly subsidize global bond yields. Plus: where the thesis could break — oil shock, French contagion, China's flows reversing.