Between China and US, One-Third of the World Is Tightening
US consumers and the Chinese government are the two biggest determinants of global growth. When US consumption collapsed in the wake of the housing crisis in 2008-09, it almost brought the entire global economy and financial system down. When financial market reforms brought China to the edge of a hard landing in 2015, it ended a 10-year commodity bull market, pulled global equities down 25% and sent a wave of recessions through emerging markets. In both instances, there were significant repercussions in fixed income, including wider spreads and a flight-to-quality rally in Treasuries.