Is China behind the decline in US Treasury yields?

The rally in the US government bond market this year has coincided with a pick-up in China’s netpurchases of long-term Treasury securities, which some have attributed to intervention to weaken therenminbi. But coincidence does not prove causation and there are other, better, explanations for thedecline in government bond yields, both in the US and elsewhere. What’s more, China’s holdings of allTreasury securities have barely changed, casting doubt on the link with FX intervention too.