China’s bond market is not a truth-teller to match bigger, more liquid markets like the US and Italy. But nonetheless the signal it has sent is clear. Its yield curve flattened almost to the point of inversion a month ago, and in recent weeks it has steepened again.

For those not initiated in bond market vocabulary, this means the gap between the yields on 10- and two-year bonds thinned almost to nothing – 0.05 percentage points at the lowest point, according to Bloomberg data – and has now rebounded. Ten-year yields are about 0.8 percentage points higher than two-year yields.

Why does this matter? Normally, investors demand a higher yield for longer-term bonds, to compensate for the extra risks of committing for the longer term, primarily inflation. When the yield curve flattens or inverts, it is a signal that investors expect lower interest rates and lower inflation in future. In other words, they expect a recession.