On Tuesday, China cut interest rates and required bank reserves in a bid to stabilize its stock market and to restore confidence in its economy.

The 3.7% growth rate for the U.S. economy between April and June was stronger than 2.3% initially reported by the government. Treasuries then slumped as shares rebounded and U.S. data showed better-than-expected durable goods orders and gross domestic product.

If China continues to engage in unprecedented dumping of U.S. Treasuries, the resulting upward pressure on U.S. interest rates may force the Federal Reserve to resume an unexpected fourth round of quantitative easing. “China selling long Treasuries????“. “Because bonds have done so well for so long, this may be the Mother of All Bubbles”, he says.

Nonetheless, he added: “I really hope we can raise interest rates this year“. U.S. stocks opened lower on Friday, but were on track to finish the week slightly higher. The benchmark 10-year yield recorded its sharpest one-day rise since early March. The 30-year note yielded 2.87%.

Traders said long-term bonds also attracted fresh buyers after a two-day selloff which had been driven by stabilization in stocks and oil prices. On the supply front, the Treasury Department sold $26 billion two-year notes to tepid demand.

Bond investors are grappling with conflicting factors in the short term. Yet with yields near historically low levels, many fund managers find them unattractive to buy.

A weak reading on inflation is sending Treasury prices higher Friday morning. China has communicated with U.S. authorities about the sales, said another person. Calling the end of the bond market rally has been a death sentence. But market turmoil and worries about the global economy have dimmed expectations that the Fed will take action at the September policy meeting.

“Bond bears have misread economic growth”. Global stocks have stabilized over the past session, but surging volatility across many asset classes means sentiment remains skittish, traders said.

His remarks were echoed later in the afternoon by the president of the Federal Reserve Bank of New York.

MOVE Index. The gauge jumped to 94.5 on August. 24, the highest level since February.

The communist government also admitted simultaneously intervening in the Chinese stock market to halt further declines. A Fed rate hike might represent the pin to burst the bubble. While the number was unchanged from Wednesday, it has dropped from around 50% earlier this month.

The yield on the five-year note fell to 1.455%, while the seven-year note dropped to 1.848%.