Rising Long-Term Yields Weigh on Chinese and U.S. Growth Assets

Chinese and U.S. equities rallied and then came under pressure this week as rising Treasury yields compressed growth valuations, while policy support and manufacturing strength offered only selective buffers.

The Week in Context

Markets moved from broad pressure on Chinese and U.S. equities early in the week to a synchronized technology-led rebound, then retreated as long-term yields rose and earnings diverged, preventing the recovery in risk appetite from lasting.
U.S. two-year, ten-year, and real yields rose over the week, while a temporary oil-price increase added cost pressure; together, these forces weighed on artificial intelligence, high-valuation technology, and other rate-sensitive assets.
A-shares posted a strong technology-led rebound before broad indices diverged, then ended with widespread declines and lower turnover; market-stabilization measures, support for private firms, and clarification on quantitative trading buffered confidence.
Chinese high-tech manufacturing, services and communications consumption, and cooperation on artificial-intelligence computing capacity offered selective bright spots, but weak domestic demand, an uneven housing recovery, and lower overall foreign investment limited the broader improvement.

Next-week Scenarios

Base case

If policy and growth data do not deviate materially and long-term yields remain elevated next week, markets may continue to favor relatively resilient value assets while growth valuations stay constrained.

Upside case

If the Federal Open Market Committee decision eases rate pressure and U.S. gross domestic product and personal income and outlays data do not intensify inflation concerns, lower discount-rate pressure could support a recovery in risk appetite for Chinese and U.S. growth and technology assets.

Downside case

If the Federal Open Market Committee signals stronger rate constraints, or U.S. growth and personal income and outlays data reinforce inflation and rising-yield expectations, an escalation in U.S.-European technology tensions could add pressure on growth stocks, rate-sensitive assets, and cross-border export supply chains.

Key Events Next Week

07-29

Federal Open Market Committee Decision

The policy signal will shape U.S. rate and discount-rate expectations, with consequences for growth stocks, bonds, and global risk appetite.

Federal Reserve

07-30

U.S. Gross Domestic Product

The growth data will shape assessments of economic resilience and affect equity valuations through rate expectations and corporate revenue expectations.

U.S. Bureau of Economic Analysis

07-30

U.S. Personal Income and Outlays

Income and spending data will shape views on consumer demand and price pressures, affecting rate expectations and consumer sectors.

U.S. Bureau of Economic Analysis