US bond markets are historically wary of policymakers who appear complacent about inflation risks. When there is fear of future price inflation in the air, markets expect to be compensated appropriately and reprice accordingly.

The world cannot shift to a low-carbon economy without deploying a lot of high-carbon-producing energy to build green infrastructure. The age of oil might be ending, but for now the price of crude should stay high even as the world goes green.

While the yen retains its safe haven attributes, Japan’s exporters should be well placed to benefit from the global post-pandemic economic recovery. Japanese government bond nominal yields may not put off investors, given the different outlook for real yields.

A stronger renminbi will give the PBOC a freer hand to focus on monetary policy that supports the economy without worrying about imported inflation.

In draining cash from the banking system ahead of Lunar New Year, the PBOC is sending a message of caution. In contrast, the Fed is underplaying the connection between cheap credit and a stock market frenzy in the US.

Globally, bond markets are not only underinvested in Chinese government bonds as compared to US Treasuries, but in the process are also forgoing the higher yields that they currently offer over US paper.

The Fed’s policy to keep a lid on Treasury yields, to boost job creation and the economy, will weigh on the value of the US dollar because investors will rationally look for better returns elsewhere, notably China.

It is clear Biden feels there is unfinished business from the Obama years that was not covered in Trump’s tariff-dominated approach to trade talks with China, and Beijing should not expect an end to tariffs any time soon.

Real aim of rhetoric would be to keep government borrowing costs down as fiscal and trade deficits grow. The dollar will be allowed to take the heat in the absence of runaway inflation.

Overseas capital has moved into yuan-denominated assets and helped fuel a rise in the renminbi’s value. China’s stable economic footing gives it more monetary policy options than Europe or the US and makes it more attractive to investors.

As a major food importer, China is not immune to rising global prices, driven up by supply issues and a weaker US dollar. A strong yuan can only offer so much protection.

China’s economic situation justifies some degree of yuan appreciation, but there is more at play than just renminbi strength. Rather, the US dollar has been weakening against several currencies, and this suits American interests.

China’s economy is firing up, supporting demand for industrial metals and oil. Once the rest of the world follows China into economic recovery, high demand and short supply might mean a higher oil price.

Covid-19 cases are soaring, the US economic recovery is faltering and Congress appears unable to help those who need it. Thus, the Fed is likely to face pressure to keep its policies ultra-accommodative, risking further dollar weakness.

The pandemic might well bring forward the date at which China will overtake the US economy. Meanwhile, Trump’s policies are leaving Biden with a lot of diplomatic relationships to repair, even as Beijing pulls ahead with the RCEP and financial reform.

Not only would a vaccine re-energise equity demand for sectors hard hit by Covid-19, but it could also divert funds back to the US, although Asia will remain attractive. The implications for Treasuries and currencies are more open to question.

A ‘blue wave’ giving Democrats control of the White House and Congress did not occur, and Republicans are unlikely to support a new aid package. The Fed might have to step in again, putting pressure on the US dollar and boosting confidence in the yuan.

European governments are still struggling to suppress a Covid-19 pandemic that Beijing now seems to have contained. The policies of the two central banks are also a study in contrasts.

China’s central bank governor said the market should decide the exchange rate. This sends a powerful message to currency markets, at a time when international investors are already clamouring for Chinese assets.

China’s pledge to be carbon neutral by 2060 and political tensions are exposing vulnerabilities in Australia’s economic model. The Australian dollar’s popularity as a source of yield could fade as the central bank pursues looser monetary policy.

Markets might conclude that Biden’s White House will be less wedded to tariffs, which would be positive for the Chinese economy and its exporters.

China remains the sole bright spot amid global economic gloom, with the other major economies struggling not only to contain Covid-19 but also revive jobs and morale through unprecedented stimulus.

China needs agricultural products that the US can supply and American consumers want goods which China can provide. Whoever wins the White House will need to craft an economic relationship that works for both sides.

It might seem odd that an economy with as many problems as Japan’s should have a currency that enjoys safe-haven status. But whenever international tensions rise or the global outlook darkens, the yen tends to appreciate.

Decoupling aimed at driving down US demand for Chinese goods will mean less pressure on the yuan to remain competitive against the dollar. China’s latest economic plan will also require a lot of raw materials priced in US dollars, which means they will be cheaper if the Chinese currency is stronger.

The possibility that the recent change in Fed policy could mean higher inflation in the future could underpin the value of gold in the present. The run-up to the US presidential election and China-US geopolitical tension are also bolstering gold’s safe-haven status.

In an evolving situation, dollar bears have to decide if it still makes sense to buy another currency in preference to the dollar. While Chinese data may justify yuan strength versus the dollar, European data does not quite justify euro strength.

In other major economies, central banks’ response to Covid-19 has been a dramatic loosening of monetary policy, but China’s central bank has been more nuanced. The recovery of China’s economy has proceeded without the PBOC going all-in, leaving it more options to use in the future.

Tokyo can do little about US dollar weakness and fading confidence as Treasuries become less attractive, especially when the Trump administration is sensitive about countries weakening their currencies against the dollar.

No doubt the uncertainty surrounding the pandemic is a key driver of gold demand. However, it is also possible central bank policy responses to the pandemic, while perfectly logical now, will have undesirable consequences in time.