All eyes are on the future path of US Federal Reserve policy and what it means for the economy and asset prices. But growth trouble across the Pacific may have a much bigger impact on US yields in 2015 and 2016 than the expected pace of US central bank tightening.

China holds $4tn of foreign exchange reserves, of which $1.3tn was invested in long-dated US government bonds in 2013, according to US Treasury data. For a long time the threat that Beijing might sell US Treasuries rang hollow, but no longer.

China is struggling with an overvalued renminbi, which has hurt corporate profits and caused growth to slow sharply over the past two years. An expensive currency in a world of weak demand makes it impossible for China to rebalance its economy without a collapse. Beijing knows this and has already intervened in the foreign exchange market to lower the renminbi in an effort to discourage currency speculation and support growth.