Hank Paulson, the US Treasury secretary, says he is not worried about reports that China plans to cut the share of its foreign exchange reserves held in dollars. But perhaps bond investors ought to be.

There is an assumption priced into the US Treasury market that demand for long-dated paper is so strong from pension funds and countries with ballooning foreign reserves such as China that yields will remain depressed. The risk premium that investors usually demand for holding bonds over a longer period has shrivelled.