The Transmissive Effect of the Federal Reserve's Interest Rate Hike on China's Government Bond Yields in the Context of the COVID-19 Pandemic

Abstract

The global economy underwent profound shifts due to the COVID-19 pandemic, bringing monetary policies of major economies, such as the U.S., to the forefront. As the U.S. Federal Reserve's decisions can resonate globally, understanding their ramifications on China's bond market post-COVID-19 becomes paramount. This research delves into the ripple effects of U.S. monetary policy on China's bond market dynamics. Utilizing a mixed methodology, the study incorporates both quantitative and qualitative analyses based on financial records and historical data. Preliminary findings highlight the U.S.'s aggressive monetary responses during the pandemic, and how China's bond market, with high yields, presents a competitive return. Additionally, China's swift economic recovery and robust export figures reinforce its financial resilience. The study further examines the transmission effect of the U.S. Federal Reserve's interest rate policies on China's government bond yields. Ultimately, the research aims to offer comprehensive insights to navigate future economic landscapes in light of global challenges and monetary policies.